Mar 05, 2015 Philip Burgess
Short term lending has provided a way for consumers to immediately get the money they need for essentials. This means that someone who has unexpected car repairs or any unexpected expenses can ge the cash he or she needs immediately.
Critics have been attempting to lessen the availability of short term lending. The Washington Post referred to them as a "slippery bunch" that "slips through the cracks." This isn't the case for most lenders. Many try to help the struggling public get cash when they need it and give them the option to pay it back in installments.
Those who use short term loans
The News-Press & Gazette Company highlighted how many legislators are attempting to crack down on regulations for short term lenders, despite how they help the public make better financial decisions. The unexpected can happen - car repairs, medical expenses and the need for basic necessities when there's no money coming in. While the single mother trying to get money to pay for what she absolutely needs is a common image when one thinks of short term borrowers, it's not far from the truth.
Lenders, however, are usually unaware of their clientele's history, as the source mentioned that they provide the loans without any knowledge of the borrower's history or financial difficulties. This allows them to be unbiased and fair when they provide their customers with the money they need.
The endeavored public and the options they have
Short term loans are beneficial to the individuals who would be rejected to use traditional lending options. The fees for this alternative credit option are high, but since it's only for a short amount of time, the size of those fees are restrained. Traditional banks provide lower fees and interest rates with a longer time available to use the loan.
"We're the only loan in Missouri that has an interest rate cap," Randy Scherr, executive director and lobbyist for United Short term Lenders of Missouri, told the News-Press & Gazette Company. "People don't talk about that. It's just a misleading way to judge a short term loan."
However, many don't have the option to use these traditional methods. Those who are especially in need of money typically do not have an established credit report or financial history. The unbanked and underbanked are a huge part of the public who needs to use methods such as short term loans.
There are many working Americans who find it difficult to manage finances in a world of capitalism. There are - unfortunately - limited opportunities and rising inequality in such a world, but short term lending offers an option for those struggling individuals.