There are several credit options on the market. However, often these loans from non-traditional credit institutions have a very bad reputation and we are often warned against taking expensive loans or having to go through a so-called quick turnaround and outright loss. How, really, are these online consumer loans really so dangerous?
Most people have a loan. Few of us are able to make bigger purchases, such as a home or car, without borrowing money, and often the loan is also used to cover the cost of living, especially during a temporary period of life, such as studying. So borrowing is generally perfectly acceptable, and for most of us, the only way to buy our own home, for example. Why, then, do you have such a bad echo in instant lips?
Beginning times for quick nipples in Finland
When they came to Finland, the instant levers were, as their name suggests, usually small, quick-access loans that were easy to deal with when a sudden and temporary cash crisis occurred, for example, when an electricity bill suddenly fell or early due to payday. There was no need to ask your friends any more, but you could easily get a loan from the right lender.
Some decades ago, a borrower had to march into the grasp of a bank manager carefully asking if the bank might be able to grant a loan, and now suddenly he received money via SMS without either question or paper war. Easy! Tempting!
No wonder, then, that the new form of loan was very popular. Unfortunately, just too easy to get money, coupled with surprisingly high interest rates and costs and the requirement for a quick repayment, was such that many were no longer able to keep up with the reality of their own economy. Quick draws were easy to use even with a small amount of money, and as the account dwindled to pay the bills, a new lever had to be taken to deal with the bill. When they wanted to make money with a single SMS at any time of the day, some could even finance the party with credit. As anyone will surely understand, this type of credit is not economically viable, but will undoubtedly lead to problems in the long run.
Although levies were granted only to adult adults who, at least in theory, understood what they were doing when they borrowed, granting levers was still somewhat irresponsible. No credit information or income was inquired, and little attention was paid to repayment ability.
Often, the high cost of the loan came as a surprise to the borrower, and the other terms may not have been read or understood after all. Many got into an economic spiral, with the loan being paid off with a new loan, with the loan capital growing and the high interest rates and expenses running. Not always the indebted could even seek help for their situation and ended up losing their property and credit as the affliction deepened.
New legislative restrictions
The wild west of quick leashes without restrictions had already caused a heavy blow to the public image of levers and given them a reputation as the ultimate destroyer of the economy as the legislation changed. Short-term, small loans were capped to incur unreasonable annual interest rates, and, among other things, late-night lending was banned.
Clearer rules of the field have certainly been in the interest of both borrowers and lenders. As a result of the law change, many more irresponsible companies seeking to make quick profits left the market, leaving behind those who want to be responsible and open-minded lenders.
Although loans from these companies are still easier to obtain than from a traditional bank, the borrower’s income and debt servicing capacity are now being scrutinized more carefully to avoid the burden on the borrower of over-indebtedness. Likewise, the terms of the loan are explained more clearly, making it easier for the borrower to understand what they are committing to. It is also easier for the borrower to compare different options to find the most favorable one.
Surprisingly many. Because of the bad reputation of instant loans and small loans, borrowers may not publicize their use of small loans, but most borrowers are just ordinary people with a temporary financial imbalance due to various surprises.
Of course, the most expensive loans and consumer loans are taken by the lowest income earners and those who have not yet managed to raise their wealth. The price of a loan is determined by the risk determined by the lender, and the higher the risk of repaying the loan, the higher the interest rate of the loan. If the income is irregular or there is no property that could be used as collateral for the loan, the interest rate on the loan is always higher than it would be on a secured loan.
Small loans are usually used to pay for the normal living expenses. A sudden medical bill or a delay in paying your salary can mean that you don’t have the expected amount of money to pay your bills and buy food, and this gap is being filled with temporary credit.