16 Oct Can You Get a Payday Loan with No Paperwork?
Is there such a thing as a payday loan with no paperwork? What an enticing prospect– a loan you can get almost overnight, online, that you only have to pay off in a month (or three, depending on the loan), with no paperwork. It almost seems too good to be true…
Unfortunately, 30, 60, and 90-day loans advertised as being paperwork-free are always scams are illegal. By law (the National Credit Act), lenders must conduct an affordability assessment before lending you money. If they find out you can’t afford the loan or you have too much debt already, they can’t lend you money. If they do, it’s a criminal offence called reckless lending, or reckless credit.
No, you can’t get a payday loan without paperwork, as this is against the law on the lenders’ part. If someone does loan you money without paperwork, they are almost definitely a loan shark or trying to defraud you.
Moreover, if we define “paperwork” as a contract, then the payday loan is not a loan under the law, which means there is nothing that will protect you from your lender charging you too much interest or repossessing your assets unfairly.
Let’s discuss why you can’t–shouldn’t– get a payday loan without paperwork, what you should do instead, and what to do if you spot someone offering “no paperwork payday loans”.
On Reckless Lending and Paperwork
Under the National Credit Act, reckless lending is when a creditor “entered into the credit agreement with the consumer despite the fact that the preponderance of information available to the credit provider indicated that
the consumer did not generally understand or appreciate the consumer’s entering into that credit agreement would make the consumer over-indebted.
[the agreement was made] without regard for the ability of the consumer to meet the obligations under that credit agreement; or understand or appreciate the risks, costs and obligations under the proposed credit agreement.”
In layman’s terms, this part of the Act (section 80, Reckless Credit) says that it’s illegal to loan you money if you didn’t understand the credit agreement (its risks, costs, and terms) or the agreement was made without considering your ability to make payments. The only way for creditors to ascertain whether you’re capable of entering into a credit agreement is by conducting an affordability assessment.
Legal Protection and Lack of Paperwork
Then, if there’s no formal agreement (a contract–so paperwork) in place, nothing is stopping your lenders from charging you too much interest, taking away your assets illegally, or threatening you. Paperwork like contracts is a legal requirement to protect you from predatory lenders and loan sharks.
Moral of the story? Even if it’s long-winded, do your paperwork. It will keep you safe, and if you need to take a creditor to court for abusing you, you have proof that you signed an agreement. If the agreement is unfair, your legal defence can analyse the contract and make points about whether you were lent money recklessly. If they can prove you were recklessly lent money, you can get some or all of the debt written off.
If you see someone advertising or offering no paperwork or no credit check payday loans, report them to the NCR or the Financial Sector Conduct Authority (FSCA).
Payday Loans vs. Debt Consolidation
Payday loans almost always have interest rates that are much too high for their value. Yes, they offer short-term financial relief, but they cost you more in interest in the long term.
If you’re struggling to keep up with your debt repayments, consider refinancing your debt instead. This is when you take out one large loan to pay off all your debt at once. You’ll have one much lower interest rate, one admin fee, and a much longer repayment period, making your debt repayments lower and freezing up room in your budget.
If you would like to learn more about refinancing your debt, contact Debt Refinance. We would be delighted to help you on your way to financial freedom.