Alright, so you have gotten yourself into a payday loan crisis. In your time of desperate need, it seemed like the only viable solution, but now that the time has come to make the repayment, you are in deep trouble since you do not have sufficient funds to repay it fully. What do you do now? Is there a way out for you to deal with it and carry on with your regular life? Fortunately for you, there is a way to delay the tolling bell on your head.
Payday loans are also known as cash advance loan, where you basically provide your lender with post-dated checks following the method you had both agreed upon. The checks cover your borrowed amount and the interest you would owe by that point. The checks are then in the lender’s possession, which they cash on your following payday (hence, the name “payday” loan). Although this is the standard procedure, chances are that mostly borrowers do not have enough account balance for the post-dated check to be cashed in on the designated date. What happens then? You, being the borrower, are then supposed to roll over, renew, or refinance the alleged loan. Doing this also comes with an additional interest rate, which is expected to be higher than the original agreed upon percentage.
Whether you refer to it as renewal, refinancing, or rollover, they all mean more or less the same thing. Whatever the reason for your loan might be, depending on the amount, borrowers almost always opt for renewal of the repayment period. But what is the process, and how does it work.
If the nature of your loan is personal and you aren’t exactly expecting big financial returns from your business, the probability of the situation is heavier on the side that you might just require a refinancing.
The procedure is as follows:
What is your current financial standing?
The first thing any lender like Quiddi Compare UK, institute, or bank reviews is your current and possible future financial condition. The process of reviewing your financial history and future is the first thing that happens after you apply for a loan renewal. The smart thing to do would be to begin prepping a few months before your payday loan reaches its time of maturity and the second of repayment is knocking at your door.
When you start preparing, go to your bank or lender, and get all the information you can. Ask all the questions about what documents and verifications one needs to submit and fill in order to kick start the renewal process. If you will apply for it in a few months advance, the process of reviewing your financial condition would be completed before you submit your renewal form, helping you skip all of the waiting around time you might have had to suffer through, had you waited for the maturity date to apply for a financial review.
How Strong Is Your Credit?
The next step in this process is to review your credit history. Your bank or lender will require complete access to your credit report and score. Even after you have passed the finance reviewing, your application to attain an extension will be denied if you fall short on your credit score. This includes your previous inability to make former medical payments, or other delinquencies, or maybe even a bankruptcy filing. Whether you were able to fully repay a loan in the past is also taken into account while making this decision.
After having passed the above mentioned processes, you will then be required to sign a new contract, conditions of which will depend on the collateral security and its required documents in presence. The amount of paperwork that will go into the renewal process will be much less than your first time. In case of no special changes in the collateral and other aspects of the contract, the bank or lender will only present you with your original contract, with an addition of a few extra clauses.
The last part of this process is when the bank has to officially verify the ownership of the collateral. Every institute has its own loan balance ratio, but once you pass that, your payday loan renewal receives the green light.