2011 has become a witness to the decline of credit card users and the increase of debit cards and digital financial transaction. According to reports, the growth of alternative financial services is phenomenal. These alternative loans for people with bad credit are getting public attention because they offer benefits that traditional institutions cannot.
Youngsters Prefer Loans for People with Bad Credit
If you intend to get a loan from banks, the first that they would look at would be your credit history. If you’re fresh out of college and have not yet established a credit history then it is likely that you would have to go through the eye of a needle before your loan application gets approved. If you happen to have bad credit, there is less than 25% chance of approval.
However, getting loans for people with bad credit online offers an almost 100% of approval. This is primarily because such lenders require no credit check.
Another reason for the decline of credit card use is that youngsters are especially happy to use digital methods to acquire loans for people with bad credit. Transacting online is seen to be more convenient because you would not need to go to a physical location. Communication for loans for people with bad credit is done via email so it’s possible to check the status of the loan through an Internet-ready mobile device.
Also, all the steps involved in the processing of web-based loans for people with bad credit are electronic. The funds are even transferred directly to your indicated bank account or wired through MoneyGram. When your term is up, payment is also taken out directly from the same bank account.
Lastly, the stricter lending criteria introduced and later on adapted by credit card providers has driven most of its customers away. Apparently, the implementation of stricter guidelines comes in the worst timing because a majority of the buying population has not yet fully recovered from the recession.
Help for Debtors of Loans for People with Bad Credit
Say you took some loans for people with bad credit and unfortunately, you lost your job. It is very likely that you will be struggling with your limited financial resources until the time that you get yourself another job. For situations like these, your lender of loans for people with bad credit has a plan B.
Several providers of loans for people with bad credit have agreed commitments in place that aim to prevent a build-up of insurmountable debts. Under the plan, lender will freeze the charges and interest for borrowers who have not made payments for at least 60 days. This would give borrowers a better opportunity at paying more affordable rates for the loans for people with bad credit that they have taken.
But lenders also remind borrowers that loans for people with bad credit are only supposed to be temporary financial fillers while you’re waiting for your next paycheck. Getting short term loans should not be made a habit in order to prevent difficulties in payments later on.
The standard measures of quality should remain to be in place, though, for companies offering loans for people with bad credit. These measures would include a full divulgence of information regarding the price and payment, appropriate assessments for affordability, practical financial help for those in need of one and of course, better communication.
If online loans for people with bad credit will really be a more popular alternative than credit cards, there must be appropriate regulatory measures in place. This will be for the protection of both lenders and borrowers.