Consumer Lending in the Modern Age
Consumer lending has undergone a drastic change in the last few decades. Back then, people would take out loans for buying a house or purchasing a car. No one thought of planning vacations by taking out loans, or using credit cards to get your hands on the latest smartphone before everyone else.
This is what consumer lending looks like in the 21st century - take a look:
You might see advertisements claiming how easy it is to secure bank loans, but that is assuredly not true. Consumers must meet rigid credit-worthiness requirements, pay high-interest rates and fees. Even once approved, it can take some time before you get your money. Economic aspects and uncertain factors have also led to banks severely limiting loan funds. You can get both secured and unsecured loans here - the latter involves high interest rates and excellent credit scores due to lack of collateral, while the former has lower interest rates with applications received more favorably as the bank takes possession of the asset you used as collateral in case you default.
This type of loan is for short-term, and due when you get the next paycheck. Typically loan amounts are small and you must give the lender access to your bank account or a post-dated check, so the full amount of the loan can be withdrawn. If you are unable to pay on time, you can become trapped unending cycle of borrowing, compounded by the astronomical fees and interest rates charged by payday lenders
These are unsecured loans as well, which can be used to take care of a variety of expenses, like home remodeling, debt consolidation, education fees, medical bills, and so on. The application is filled out and processed online and eligibility is determined using consumer-friendly assessment tools, with reasonable interest rates and funds being available quickly.
Credit cards have become a part and parcel of our lives, and also one of the most convenient ways to access a speedy loan. For example, if you require $2000 to buy some furniture, but don't have it at the moment, all you have to do is purchase them with a credit card. As long as you are able to repay the charge quickly, more than the monthly minimum, and avoid the high interest fees, this is a feasible option.
Regardless of what loan you choose, make sure you can pay it back without acquiring more debt as months pass by.