Understanding Short Term Loans Borrowing

If anyone is ever looking to borrow money of any kind they have to consider a high number of different things before they can even apply for that finance. They have to firstly know that the finance is definitely needed in the first place and then if so they have to know that the amount they take out if affordable and realistic so the debt can definitely be paid back. Then the actual type of finance can be considered, for example does someone want to take out a short term loan or maybe an instalment loan as a borrowing alternative. With the latter people tend to borrow larger amounts than short term loans and then repay the debt over a longer repayment term. As well as considering the financial product the lender can then also be considered and here people can choose from the financial market place a high amount of different lenders. They should know when choosing that option there is a high number of different lenders are some out there are clearly better than others. In the article below I am going to look further into short term loan borrowing and how people can understand the products.

The short term loans borrowing market has grown rapidly in recent years as it seems more and more people are turning to these forms of loans to get money when they need it until they are next paid or they can repay over just a minimal period of time. Short term loans are designed to help people in a short term problem and should therefore not ever be considered as a longer term borrowing option. People can repay the debt over limited periods of time of anything usually from a single month up to a twelve month maximum loan agreement duration. People usually take out short term loans for amounts that range from just £50.00 up to £500.00 but in some cases people can receive up to £100.00 by some lenders however, it is doubtful people can borrow short term loan for that value straight away as a first time loan amount.

There is a high amount of short term loan lenders that allow people the chance to borrow money really quickly and this is the main reason why loads of different people are turning to short term loans to get money when it is needed. People apply for the financial product quickly online or sometimes over the telephone and the process should only take a few minutes to complete. Short term loan lenders can then look to fund that person if they accept the application the very same day of that application being done. There can also be some lenders who look to fund people within just a matter of minutes of the application being completed and then accepted. This by many can be seen as perfect borrowing for people who need cash that quickly for example, if people receive an unexpected one off expense at least with this borrowing they can quickly have the funds available to make that payment.

Direct Payday Lenders and Short Term Loans

There can always be so many different occasions when people need money and most likely this can be down to so many different reasons. There can be certain people who need a large amount of money as they are looking to make a large expensive product for things that could possibly include a new car or even a deposit for a new house perhaps. There can be other people who need money but only a small amount to possibly tide their finances over until they are next paid from their work or basically just until the next time they have money again. No matter the values that people need and no matter also how long they need money for there will be a number of different borrowing options for people when they need cash.

I think to be honest most people when it comes to borrowing money especially borrowing a small amount of money will try to get the money first hand of their friends or family. People know this way they can take out the money interest free and then repay the debt back to that lender as soon as they have the funds available. They will know that this way they can quickly get the money needed when they want the cash and are then under an obligation to repay that person the money borrowed. Despite their will be no legal obligation to repay that debt to a family or friend member that does not mean the loan should not be repaid on time and as agreed with the person who has agreed to pay out the money. People also that borrow this money will know that if they have the money approved then they should receive it quickly by either the cash or they can have it in their bank account.

It is always important for anyone to receive their money quickly and borrowing from people close to you is not the only way people can get so called speedy cash obtained. There can be so many different financial lenders out there offering their products that can now boast that they can fund people the very same as to when they applied for the finance in the first place. Many lenders can look to pay that person in a chosen bank account the same day as to when the application gets accepted. There can be some cases when people submit loan applications in a process that should only take a matter of minutes and then if they are accepted they are based literally just as quickly. Direct payday lenders advertise quick funding to borrowers and that is what they do. The speed in which people get the money is probably the best benefit of what they offer to borrowers in the way of most short term loan borrowing. It can be perfect for people if they suddenly received an unexpected expense because then they can quickly have the funds available to make that required repayment.

Payday Loans

Payday loans are essentially cash advances that are offered to people who are in need for some urgent cash to meet their emergency needs. Payday Loans have become increasingly popular over the last few years, despite the current state of the economy and despite controversies revolving around their “indecent” interest rates; they are still flourishing in the market. This is primarily because they have identified that there will be a constant need to supply credit to people, as there financial situation will always remain unpredictable, especially after the recession which has hit the rate of employment, mostly within the middle class, the need for an alternative source of income to satisfy their immediate needs has taken precedence over the real reason behind the origin of these services.

Payday loans were initially thought as a short term solution used by people with stable incomes to cover their emergency needs or cover expenses that may arise unprecedentedly, but it has slowly shifted from that to a more mass-scale phenomenon, where people are using these type of loans as an additional source of income, thus leading many into the dreaded cycle of debt.

There are several reasons why these payday loans can lead into a cycle of debt and let us discuss some of those reasons:

       High Interest Rates: Since these loans are short term, mostly ranging between 2 weeks to one month, to be repaid on your payday, these loans carry a high interest charge in the form of APR and are calculated annually. So in simple words, the amount of interest you would be paying on your loan in a year is bundled up into a 2 week long loan. For example- if you borrow 100 pounds, the average interest would amount to about 15 pounds which is high, as it can lead to people losing out on their repayment date just because of the additional interest.

    Roll-Over Option: This, most people don’t understand, is perhaps one of the most devious ways of making money. This option permits you to roll over your loan onto the next month, which means that your loan amount has gone up from 15 pounds to 30 pounds. In addition to that, there are penalty fees which are added to the already inflated interest which could land you in further trouble.

      Additional Loans: This is another way which could lead you into a lot of financial mess and sometimes even bankruptcy. A large number of people are not waiting to repay their previous loans and are taking out another loan, which piles up into a large sum. Once you realize that there is a huge sum that is accumulated, it becomes difficult to repay the previous debt and you indulge in further debt to clear the previous debt. In financial terms, this is referred to as a cycle of debt.

There are several articles that have been posted over the years relating the practice of payday lending to the great depression. It is a common fact that a majority of the payday lenders are catering to the working class people and the poor who probably don’t have the financial knowledge to understand the implications of such practices. The majority of the borrowers represent the age group of 25-44 years, more inclined towards women through the people using these services have been broadly classified into 5 main groups:

·         People without a 4 year college degree

·         Home Renters

·         African Americans

·         Those earning below 40,000 pounds annually

·         Those who are separated or divorced

The journal of economic perspectives have gathered data which propounds the fact that most of the payday loans borrowers are seriously debt burdened and they have been denied credit or not given as much credit in the last 5 years. This raises a finger directly at payday lenders. Although the goal of these payday lenders was to reach out to people who could afford these types of loans or people who could afford to repay the loans, they have not lived upto their promises. Their affordability checks are something that is written down on paper but not implemented at any level. This can be justified by information showing that a majority of the groups and communities that are borrowing from payday lenders are already in some sort of economic crisis and this is furthered by the unstable economic climate to which they are exposed to on a daily basis.

As if this situation could not be worse, where occasional borrowers are being slowly converted into chronic borrowers, research into this has found that there are certain lenders who have incentivized this process of conversion for their staff. They encourage their staff to convert the borrowers into chronic buying and are rewarded for their effort. In other words, these companies have a carefully planned agenda behind putting vulnerable populations into the cycle of poverty.

This problem cannot be dealt with independently without realizing that this is a much larger game plan with much larger institutions involved. Major banks like Bank of America, JP Morgan Chase realized the potential of this industry when it was valued at close to 9.3 billion in 2012 and have since then been investing heavily in this industry. These banks were known to finance almost 38% of the payday lending industry and even this number is considered to be on the lower side of estimates. Although the big banks have now bowed out of the industry after being warned by federal regulators who were checking on the extent of violations carried out by the support extended to these loans. However, this problem doesn’t end here as though the major banks are now left out of the race; there are middlemen that are operating on behalf of the companies which has posed another challenge for the regulatory bodies.

This could be called a more sophisticated means of stealing as there have been cases that have been reported of lending companies automatically crediting someone’s bank account and then wiping the account clean in the name of interest payment collection. This needs to be stopped at every level. 

6 Month Loans

There are different types of loans coming out in the market today and with time; people have realized that there is a need to bring the borrower closer to the lender. This can only be done if the nature of the loans becomes more friendly and beneficial to the consumer, so that it is not as heavy on his pocket. Payday loans and other short term loans, although beneficial to the customer because they are catering to people who cannot afford other forms of credit, have turned out to be more of a disaster than a service. Therefore, there is a need to introduce other types of loans so that people have more options to choose from and there is more emphasis on reducing the debt cycle rather than contributing to it.

6 month loans or short term loans can offer that advantage as the main problem with payday loans was the short duration of time that was offered to borrowers, to repay the loan. As a result of this, a majority of the borrowers were rolling over their loans which chewed a sizable chunk out of their disposable income. 6 month loans or short term loans give the option of equal repayments over the duration of 6 months which puts the borrower at financial ease.

There are certain benefits that these types of loans carry and it is important to fully understand the scope of these loans.

       Accessibility: A lot of borrowers have claimed that payday loans are easily accessible and that is one of the main reasons why they are so popular. Therefore, short term loans serve as a complete alternative as they supply loans in an as easily accessible manner as payday loans and require simple documentation to be completed before you are eligible for the loan.

     Lower Interest Rates: The interest rates that come with these loans are usually much lower than payday loans and therefore do not put financial pressure on the borrower, as in the case of payday loans where the 2 week deadline can sometimes become disastrous.

    Fixed V/S Variable Interest Rates: These short term loans usually have a fixed interest rate as compared to other types of loans, where the market rate determines the rates charged by the lenders. As a result of this, you will continue to pay the loan amount with the same amount of interest charge irrespective of the market rate, which can sometimes turn out to be a blessing.

     Less Financial Burden: One of the greatest concerns with payday loans is their default charges on non-repayment of the loan. Studies have found that a majority of the borrowers end up in debt because of the default charges and their inability to pay off the entire amount of the loan, including the default fees and the exorbitantly high interest charges. With short term loans, since they are spread out over a period of 6 months, they usually don’t require you to shell out a very large amount every month and in the case of installment loans, the amount you will pay every month doesn’t usually change.

Considering borrower’s feedback, payday loans have also come up with 6 month loans and they are turning out to be far more popular than payday loans. These types of loans also face less regulation and it is always easier to reach out to customers where the risks are lesser and it creates a positive impact on the borrower. There are many borrowers who have exhausted the various options available to take credit and there are some who don’t wish to get into this because of their disastrous credit histories and there are some who are status conscious and don’t wish to embarrass themselves. 6 month loans cater to a holistic demographic, people who have a stable income as well as people who find themselves in financial emergencies. Since the interest rates are low on this one, the customers don’t face harassment calls at the end of their month, as long as they pay off their dues within the stipulated period of time. These types of loans don’t require a guarantor to stand against your loan and in this sense; they work pretty much like the payday loans. In short, they have all the advantages of payday loans and conventional loans and have blended into a different category serving all kinds of people.

There are several financial institutions offering these kinds of loans and it is not necessary to go to a payday lender only to benefit from these services. There are several alternative institutions also dealing with these kinds of loans and it is important to do a complete research on these institutions before jumping into anything. The uncertainty of payday loans has given rise to credit unions which are dealing with several types of loans and have proven to be a lot more credible than payday loans. This is because they offer loans at a much lower interest rate, their default charges are either very low or absent and their repayment methods are known to be customer-friendly.

There are several other lines of credit such as non-profit organizations which are usually formed within a community by 2 or 3 people who are known to each other, and as a result of that, there is no scope for any kind of fraudulent practices. These are not for profit and because of that, their main goal is to reduce the debt trap that most borrowers get into and at the same time, educate the borrower on the implications of various types of loans so that they are informed when applying for a loan. Their responsibility extends to an advisory role in addition to just lending; as they want to ensure that the population that is currently facing financial crisis becomes a lot more responsible towards their financial needs and understands the disadvantages of opting for services such as payday loans.

All in all, 6 month loans can be a blessing.

Who is Lending Stream and What can They Offer People?

When it comes to borrowing money people may not actually know that there are a number of different options available to people to select from before they apply for anything at all. People these days from the financial market place can potentially borrow when applicable both short term loans and instalment loans and here people can borrow a wide range of different loan amounts for repayments then due over a wide range of repayment terms. Both of these loans are very common when borrowing from the market place yet they will each have their own positives and negatives with the product when they are taken out. Another common way of borrowing money is via the use of credit cards, they allow people the chance to take out cash or pay for a range of different items on credit up to a set limit. As well as the product people choose they must also choose the lender to apply through and it is direct financial lenders that I will be writing my article below about. I am going to focus on the lender Lending Stream and I will state what they offer to borrowers.

Lending Stream are a large lender that offer borrowers the chance to take out loan amounts up to £1500.00 to be repaid as short term loans. They allow their customers to repay any debt taken out over a six month period of time yet they will never penalise anyone for repaying the debt early in fact some people if they clear their loan in full before the original due date they may be able to settle the balance at a reduced rate. Lending Stream allows people the chance to apply for finance quickly online in a process that should only take the average person a few minutes to complete. If that same application can then be accepted they aim to pay their customers within again just a few minutes. Lending Stream truly can fund people within just minutes of any application being accepted. This can become perfect short term loan borrowing but anyone who takes out loans like these should never use them as a long term financial solution.

There can always be people looking for finance that have poor credit and because of this they have probably found getting financial applications accepted can be tough or really expensive when occasionally they can get loans. With this in mind if the same people apply to typical high street lenders such as high street banks then they will be declined. Lending Stream on the other hand may be able to help these people. They run their own credit scoring system yet they can lend to a wider range of people than the high street lenders, Lending Stream can also look to lend to people that may have missed other debt payments in the past previously where as some lenders could not. Any loans designed to help people with poor credit may be much more expensive than the average borrowing loan so bare this is mind.

What Lending Stream Can Provide to People

When it comes to borrowing money a high amount of different people will not know that there a high number of different things to consider before any financial application can then be made. That person looking for finance must know that they one hundred percent need to borrow that money in the first place and then if so they have to know realistically what they need to borrow. They have to always know that they have the financial means to repay the debt so that no repayments are ever missed on the loan. Missing loan repayments will nearly always result in severe consequences for that person so most people are always keen to avoid this. The actual type of finance can then be considered and here there are always going to be a high number of different options available. People can often borrow both short term loans and instalment loans where different loan values can be taken out and then be repaid over a number of different repayment terms. Both ways of borrowing can offer benefits as well as negatives to the customers when borrowed. Below I am going to look at the finance Lending Stream can offer and why a large number of people tend to use them to borrow cash.

When money is needed in the way of a short term loan, people need relatively small amounts of cash for usually a limited period of time. Lenders normally offer the product over a single month such as payday loans or people can offer the loans for repayments over anything up to a twelve month period of time. Lending Stream offer people the chance to borrow £50.00 to £800.00 if they are using the company for the first time or existing Lending Stream borrowers can be accepted for amounts up to £1500.00. They allow people the chance to borrow the above amounts for repayments over a six month period of time that is both the minimum and maximum duration on the loan agreement however people can repay the loan earlier if they wish to and they will never be penalised for doing this.

One of the largest benefits of using Lending Stream will be the fact that they offer customers the chance to quickly apply for the product and then if the same application is accepted they can fund people within just a few minutes of them submitting the application. They aim to actually fund their successful applicants within just four minutes of any applications being completed and then accepted. This can be seen by many as perfect borrowing for people who need the money that quick, for example if anyone received an unexpected bill through the post and they needed to make that repayment Lending Stream may be able to assist that same person. There are a high amount of lenders offering short term loans that allow people the chance to be funded the same day and they action this for free of charge.