How The Coronavirus Changed The Payday Loan Industry
The novel coronavirus has effectively changed our day to day lives. Just a few months ago the economy was strong and we could go about our day to day lives with little concern for financial issues. Applicants who were in need of a personal loan could get approved for financing with no problem and expect cash in hand that same day. Now it seems that we can’t do anything in person that used to be normal and our whole landscape of financial and social matters has changed. Payday loan companies, much like mortgage lenders and small business lenders and not immune from the current situation. As with any unprecedented global event, the largest payday loan companies are watching the crisis unfold. Most online payday lenders are still operating with no problems. The bigger issue we currently see is with storefront payday loan and check cashing companies who literally can’t open their doors. Let’s take a deep dive into how the coronvirus is changing the lending environment in Ohio and all across the country.
It used to be that your only way of applying for an online payday loan in Ohio was to meet with someone in person. You had to go to a local loan company and apply face to face. Then the internet came along and you had many more options. With most lenders you could submit an application online and get a funding notification within a few minutes. Having the luxury of comparing loan offers and rates with a list of Ohio payday loan companies only makes it easier. The ability to shop around entirely online for a cash advance is definitely helpful in a stay at home environment. But the effects of COVID-19 in 2020 and beyond may cause serious problems for people seeking a payday loan or any other type of personal loan.
When someone applies for a payday loan the lender will often check their credit and make sure they have the ability to pay back the full amount borrowed with an online payday loan. This is no different when you’re looking at companies who are registered and able to provide funding in Ohio. Most companies are able to abide by the stay at home order in Ohio with no problem. Many loans are underwritten and approved entirely online and consumers hardly ever have to meet with someone in person. There are certain situations where you may need to speak with a customer service rep on the phone. But that’s no problem now as online lenders are able to have their reps work and speak to customers remotely.
The problem we see with online payday loan applications in Ohio is a liquidity and approval one. With the current COVID-19 shutdown there are record levels of people losing their jobs. Not only that, many lenders are concerned that prospective borrowers will be able to make future monthly payments. So, a good amount of people are applying for payday loans. But it’s hard for underwriters to approve them as they can’t be sure the loan will be paid back in time. Many of the large banks and financial institutions that underwrite mortgages and bank loans will set the rates and buy short term securities in bulk. That means if they’re not ready to open up and lend it’s going to be that much harder for the smaller operations! With an unemployment rate approaching 15% in Ohio it does make sense that borrowers may miss payments down the road. It remains to be seen how the coronavirus pandemic will shake out. Already we’re seeing some stay at home orders rescinded and more people are going back to work. The problem remains that many people have lost their jobs and we can only expect applications for online payday loans in Ohio to increase.