Aug 17, 2013 Quinn Thomas
Short term lending has been in the news a lot recently, and not always for positive reasons. The industry as a whole has been examined because of developments in New York, where Governor Mario Cuomo is trying to outlaw online loan companies.
However, what the biggest detractors of the industry might not be aware of is the fact that the perks of loans vastly outweigh any potential flaws. The reality is that these companies help a large number of individuals every month who would otherwise have to take a hit on their consumer credit scores because of nonpayment of accounts.
On top of that, lenders bring a number of benefits to other companies and industries as a whole, bolstering the economy in myriad ways.
Perhaps if some of the detractors knew about the various perks brought forth by short term lenders, this would eschew some of the myths associated with the sector.
Customers aren't in the dark
A commonly misconceived perk is the fact that borrowers who go to short term lenders for financial help often know exactly what to expect and what is required of them. This sets up both parties - borrower and lender - for success in the future and can allow the two to build a good relationship.
For some reason, a number of people who work against the lending sector think that borrowers are being swindled because they don't know the nuances of the field. That's simply not true, a recent MicroBilt study revealed.
Our report explained that more than half of all small dollar loan borrowers pay back their loans having renewed the cycle three times or fewer. Plus, 74.5 percent of respondents to the poll noted that they would either definitely use or at least consider using short term loans for their financial needs, indicating that the majority of borrowers are pleased with their decisions.
Finally, when asked, most respondents knew the correct answers to questions regarding loan terms - like the reasonable number of renewals and what fees accompany various actions. This means that borrowers are well-informed.
Providing help when others won't
During the Great Recession, the United States economy was thrown into turmoil. As such, many banks and traditional lending companies closed their doors to anyone who wasn't a sure thing. Not only did these facilities not have a lot of money to loan out in the first place, but they were concerned that they wouldn't be paid back as more individuals were being laid off and expenses and inflation rose.
Short term lenders, however, didn't deny people - and, in fact, were a valuable asset to many in need. This sentiment has carried over to today even though we're in recovery. The lenders tend to give everyone a chance, even those with poor credit histories. After all, why shouldn't these people have access to credit as well? Having a less than stellar credit score could be a reflection of a few bad decisions made when the individual was young, not a depiction of someone who still isn't credit-worthy today.
Easy to obtain
On top of the fact that consumers from all walks of life can turn to short term lenders to find relief, the loans themselves are relatively easy to obtain from an administrative point of view.
As The Happy Homeowner noted, applications at these businesses are often very easy to fill out and don't require proof of a lot of records to complete. Moreover, unlike with more traditional loans where you have to wait days or weeks for bankers to make their decision, these alternative finance options are often cleared within 24 hours so the consumer can meet financial obligations as soon as possible.