Before the days of online lending, storefront lenders were the place to receive a fast payday loan. A storefront lender is a funding provider with a physical shop where consumers can request a loan.
These brick-and-mortar locations are still very popular. There are over 20,000 payday lenders located across the U.S. Chances are there is a location within a few blocks of your home.
Is Storefrontlending Safe for Getting Loans?
All lenders require a license from the state to operate. Reviewing this license information is a great way to make sure a lender is safe. These certifications should be on display in their operational quarters for their clients to see.
Another good indication of trustworthy storefrontlending is the lender’s presence in the community, which can be seen through reviews and feedback from previous customers. If the lender has been open for a long time, chances are there is a lot of information readily available about them online.
Some storefront lenders have been operating for decades, making them even older than online lenders.
When vetting a potential lender, consumers can look to family members, friends, or neighbors that have previously used the product. Keep in mind not being quick to judge, as most borrowers may offer negative feedback purely based on their personal experiences, such as late payments.
Storefront Lender Red Flags
There are warning signs that make it easy to know when not to work with a loan provider:
- Watch out for storefront lenders that haven’t built a reputation in the area yet.
- Never work with lenders who don’t possess any certificates or licenses.
- Do not recite personal information to unsolicited lenders that call you on the phone.
One thing to keep in mind is that asking for a post-dated check is, in fact, not a red flag. Storefront lenders regularly hold on to a post-dated check to make sure payment is made on the loan’s due date. If the loan is overdue, then they can cash in the check and cover the loan.
What is Better: Storefront Lending or Online Lending?
We live in an online world! Practically anything is accessible through the internet nowadays—from shopping to education, and even borrowing money.
Many consumers prefer the online method because of its accessibility and convenience. For instance, an applicant can start the short-term loan request process by completing an online form. It begs the question—is online lending better than using a mom-and-pop lender?
Benefits of Storefront Lenders
- Lenders may verify your income and checking account information and offer the possibility of delivering the cash in as short as a few minutes at a store. However, if the transaction is done online, the transfer may be extended until the next business day through an electronic transfer.
- In exchange for the loan granted, the lender will ask for a signed post-dated check or consent to electronically withdraw money from the borrower’s bank account. Borrowers should be notified that the loan repayment is expected promptly after receiving the upcoming paycheck—typically within two weeks.
- Many customers opt for a storefront lender purely for their physical presence, which offers some security in the mind of the borrower. You can ask for help on the spot as you complete the application form at their location, and you can converse with a real, live person to get the answers that you need when you need them.
- Local shops may have more financial products than what an online lender offers. That means consumers may receive an alternative financing option at a brick-and-mortar location.
The immediate response time is what drives most customers to use storefront lenders. Consumers facing an emergency expense will trade convenience for faster funding.
Benefits of Online Lenders
The world of online loans is designed to provide a convenient solution to requesting a payday loan or similar financial product. The biggest benefit of online lenders is that applicants do not need to leave the house. Additionally, loan repayments may also be made online, creating an overall hassle-free process.
Disadvantages
Online financial platforms often offer same-day approval for borrowers with good credit scores. Both online and storefront lenders may work with consumers with lower credit scores, but online lenders may not have as many financial products at their disposal.
Online lenders operate and function through a website, though some have a physical presence as well. Potential applicants may access their stores through a website, and the loan request and approval may be conducted online. For further inquiries about the loan, the process, or the repayment, borrowers can seek customer service representatives to address their concerns. These representatives may not be as easy to reach when working with an online lender.
When it comes to the transfer the funds, most online lenders will not be able to transfer the money faster than one business day.
Choosing Between the Two
So, which one is better? Both lending options offer benefits and disadvantages; thus, it would primarily depend on the borrower’s situation. If you don’t want to visit a store or leave your house, and you can spare a few days to receive the money, then requesting the cash online is your best bet. However, if you would rather communicate with a representative on the spot, then going to a physical store may be a better option.
Find a Storefront Lender Near You
One of the fastest ways to find a local lender is to request a loan through a lending partner’s website. These companies partner with hundreds of lenders and try to help connect consumers to a lender that fits their needs. It’s one of the fastest ways to reach a loan option.