Finance Solution | Processing Time for Personal Loans

The processing time for personal credit applications often varies depending on the type of loan and the lender that one is dealing with.

?For unsecured debts, meaning those without collateral, the processing time may range from 15 to 20 days. Banks are usually more rigid when it comes to screening this type of debt because of the lack of security. In case the borrower fails to repay the debt, the bank will have no other recourse but to file a collection case against the delinquent client. However, even if the collector wins and the defendant is ordered to comply with the judgment, actual compliance is another matter; more often than not, the bank will still not be able to collect the amount demanded for. This is why some banks prefer giving out credit, which is secured by collateral.

A debt can be secured by pledging some personal property, such as gold accessories or some portable equipment. The pledger may need to physically deliver the property to have its value assessed by the pledgee. If the latter is satisfied that it will be enough to cover the debt in case the pledger defaults from paying on time, the funds will be released on the same day. Otherwise, the debtor may have to come back with more properties to satisfy the creditor?s requirements and it may take a week or so before they finally get the funds that they need.

In the case of quick personal loans, borrowers can get their applications processed in 24 hours or less. This is because lenders of this type of credit rarely do background checks, if at all. They will simply require the borrower to fill in their name, employment details, and bank account details. They may also ask the applicant to draft a post-dated check, which the lender can, encash on the day that the payment is due, or require the applicant to sign a contract, allowing the company to debit the payment from the borrower?s payroll account. As the name implies, quick cash debts are fast and convenient, especially for those who need emergency funds.

Borrowers have to be careful, though, when securing quick cash credit; it may be a speedy fix, but it will cost the debtor so much more in the payment of interest and lender?s fees. Asking for a payment extension will be quite easy, but most payday companies will charge at least $50 for every extension. If one adds that to the interest on top of the principal, the extension fee might not be worth it and it might turn out to be more prudent to clear one?s liabilities as soon as practicable.

Given the time it takes to process credit applications, prospective borrowers have to think about what they will be needing credit for and how soon they will need it. Indeed, securing a payday debt may seem like the easiest option, but a borrower has to think about the pay-off. If they do not need extra funds that urgently, they might as well get funding from a bank through a secured or unsecured loan.

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