When you need a payday loan fast, you don’t have the time to go to an office and sign a contract. You may not even be able to print one, sign it, and fax it on, so what can you do then? This is where e-signature payday loans are incredibly useful. But what exactly is an e-signature, and how can we be sure they are safe?
What Are E-Signature Payday Loans?
As the vast majority of payday loan applications are only available online these days, the e-signature payday loans have become increasingly important. It’s certainly a very different world to that which existed when signatures first became a legal method of agreeing to a contract.
However, whether you sign a document by pen or by PC, your signature means that you start a contract with the other party, so it’s vital to understand what you are signing. Today, we’re going to take an in-depth look at the history of the signature, and how the e-signature has become so important, putting a particular focus on online payday loans, of course.
A brief history of the signature
To understand the importance of e-signatures for payday loans, it’s vital to comprehend the historical context of signatures as a whole. And for that, we need to go back in time – by almost a thousand years. The earliest example of a signature around today is from the year 1069. The signature is that of El Cid, the very famous military leader and nobleman from Spain.
But it wasn’t until 1677 that signatures became widespread. What changed? Well, the Parliament of England at the time decided to pass a law about signatures, called the Statute of Frauds. The new law meant that particular contracts needed signing to be legal. One of the most famous signatures in American history occurred 99 years later when John Hancock signed the Declaration of Independence in 1776.
Technology starts to take effect
While the history of the e-signature didn’t start until 1976, there are earlier uses of signatures via different technologies which are worth mentioning. And, they occurred a lot sooner than you might think. For example, the first form of digital signatures appears in 1869, with the advent of telegraph technology. The New Hampshire Supreme Court of the United States of America allowed such signatures to be legal – and telegraphed contracts continued to be used.
However, as we mentioned above, the idea of a digital signature scheme didn’t occur until 1976. Whitfield Diffie and Martin Hellman proposed the idea as pure theory, suggesting the possibility of a practical application. However, buoyed by the theory, three other men sat up and started taking notice. And a year later, Ronald Rivest, Adi Shamir, and Len Adelman announced the invention of the RSA algorithm – the basic and very primitive initial form of the digital signature.
Other signature schemes started to arrive on the scene soon after the RSA proof-of-concept. For example, the Lamport signature and the Merkle signature technologies came into being, as well as the Rabin signature. All of these signature schemes suffered from one big problem, however – security.
The importance of security for electronic signatures
Of course, when you sign for e-signature payday loans or any other contract, security is essential. But it wasn’t until 1988 that this issue was addressed. Shafi Goldwasser, Silvio Micali, and the aforementioned Ronald Rivest became the first group to define security requirements for e-signatures. It was an important step, which eventually tied into the commercial launch of Lotus Notes 1.0. The software used the old RSA algorithm and is roundly regarded as the very first mainstream software package to offer the ability to create a digital signature.
As digital signature technology became more secure, and the Internet started to take hold of the public’s – and businesses’ – attention, its use began to spread. But it wasn’t until 1999 that the EU passed a law about digital signatures, with the UK finally deciding to recognise e-signing on contracts in 2002.
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E-signature payday loans – the legal summary
So, all that history finally brings us to today. Now, under English law, a written signature is not always required to make a contract valid. This act has been taken advantage of by all kinds of industries, including payday loan companies. These days, a contract is usually seen to be valid in the eyes of the law. And whether they have a verbal agreement, an e-signature, or a traditional, physical paper document is irrelevant in many different cases.
According to case law, a contract cannot be denied enforceability just because of the sheer fact that it was signed electronically. Consumers must understand that agreeing to the terms and conditions is the same as making a legal agreement. Consumer facing businesses of all kinds can use e-signatures for all sorts of things, from lending money to establishing a contract for retail accounts, such as store cards.
Other Uses for E-signing
But it’s not just consumer enterprises, payday loan companies and other financial institutions that use e-signing. Human resource departments for businesses can use e-signing to draw up Employment Contracts, sign off benefits paperwork, and also use it for new employee documentation and onboarding. Real estate documents can also be transferred and signed electronically, too. So, when you rent a house these days, you might sign a lease agreement with a landlord over the Internet. If you buy a new home, you could e-sign all your purchase and sales contracts, as well as any other vital document involved in the sale of property. There are commercial agreements to consider too, such as NDAs, sales agreements between suppliers, and procurement documentation.
The pros and cons of e-signature payday loans
As you can imagine, there are plenty of advantages and disadvantages of using e-signatures. A principal benefit is that public-key cryptography is incredibly safe, so consumers and businesses can enjoy peace of mind. In fact, many security experts believe that if you use the right e-sign software, the risks are so small, that it is harder for an e-signature to be forged than it is for an ink-written signature.
Electronic signatures are also admissible in court – although some e-signing is regarded as more reliable evidence than others. Plus, electronic signature software and its acceptance by the courts means that companies can offer products like loans faster. And, that they use far fewer paper documents, which has a positive environmental impact.
However, there are some risks. For example, an email you send to someone else could prove legally binding. Therefore, many people have small print and disclaimers at the bottom of their emails. These disclaimers make it clear that you are not entering into a contract, and nothing within it is legally binding. It’s also worth knowing that security experts are increasingly worried that digital signatures are set to become the identity thief’s method of choice in the not too distant future. And finally, e-signatures can leave businesses more vulnerable to fraud, as anyone can claim anything online.
E-Signatures are Legally Binding
As you can see, the history of e-signature payday loans is a lot longer and more intricate than you might think. But the main takeaway is this – if you agree to the terms and conditions laid out by a payday loan company online, it is legally binding. So, it’s important to understand all those terms and conditions before you agree to accept them.