For years, you go to banks and other traditional financial institutions for your alternative money needs. For years, you went through the humiliation of having your financial information opened to numerous individuals. Based on the system used, your credit score will determine how much money you will be lent and how much interest rate you will need to pay. This is always the case regardless of the reason behind your low credit rating. That is why when online money loan lenders came up, they were received with a warm welcome by consumers with cold shoulders by their competitors.
Online loan transactions disregard the need for a credit check. They are fast because they skip background investigations and lengthy interviews. Instead, a lender will only ask for reasonable requirements that will support your ability to pay. These requirements would be a proof of active employment, a proof of age and US citizenship and a copy of an active bank account. There is no credit check required. Hence, you are free to try out the services of a lender even if you have bad credit or no credit history at all.
Recent Struggles of the Online Money Loan Industry
Since the idea is relatively new, competitors would think that a loan service is a scam that will only rob people of its money. But with the many genuine testimonies provided, this claim has already been corrected.
However, its infancy opens up a lot of room for improvement. For instance, there is no universal guideline on how these services should operate. Yes, the terms of already established companies may be used as inspiration by the newer ones but this is just a copy and paste technique. As of the moment, there is no national law to govern online loan companies.
With regard to the understandability of its rates and fees, there are still a few considerations to follow. It may be true that online loan services have a higher interest rate but that’s only because of their increased risk for underpayment or no payment.
The interest rate percentage used by traditional companies will not necessarily apply to money lenders. This is because online transactions are supposed to be short term. This means that the money needs to be repaid within 30 days or else, it will roll over to a new term. It is also because of this fact that online lenders imply a maximum of $1500 to $1000 per approved application.
The concept of an online money loan will take a few more years to get perfected and fully absorbed. For now, they are already available in their rawest form and you, as the consumer, will bear the responsibility of making sure that you understand all the fine print before you accept the money from an online lender.