Today’s banking industry is confusing and just a tad bit unscrupulous at times. The Justice Department and state regulators are targeting banks all over the country that service a broad range of what they consider questionable financial ventures. While the government’s efforts to weed out bad lenders that engage in fraudulent transactions or violate federal laws this often leaves many of those who are seeking loans scratching their heads. There is a set of much needed financial services for underbanked people who rely on legitimate short-term lenders and now there are some honest and reliable services to fill those needs.
Short lending is pretty simple. An individual has an urgent short-term need for cash and that’s where a payday/short term lender comes in. A person with a job, a checking account and proper identification can borrow anywhere from $100 to $500 until his or her next payday. Often time’s borrowers write post-dated checks or provide written authorizations to the short term lender for the amount of the loan plus a fee, typically 15%. The loan is either repaid in person by the borrower or the lender cashes the check or initiates an electronic funds transfer; it couldn’t be any easier.
The typical first-time short term loan transaction is completed within 30 minutes online. Very few banks are willing to make these loans because the transaction costs are simply too high but there are lenders out there who are willing to make this financial service available to those who need it. Often times an online loan search engine can help those seeking out one of these short term loans. These services offer the client a chance to compare lenders and find the loan that suits them best. There is no charge for using one of these search engines such as Moneylenders.net. The search engines often vet their lenders too ensuring that honesty is in play with each and every loan.
Millions of middle-income Americans live paycheck to paycheck and they are doing their best to manage their finances so that all their obligations are met; however life happens and then something unexpected arises these hard-working folks need an avenue to pursue. What if your car breaks down or there is an unexpected doctor’s bill or a badly needed roof repair…the need for short-term credit may arise.
Sure in times of need you could turn to relatives or friends for help but often times this leads to hard feelings and uncomfortable situations. Studies have shown that borrowing money from friends and family can often end relationships. Short term lenders offer a better way out without all the personal connections that can be harmed.
Critics of short term lending cite the high interest rates they charge as a reason not to use them, a $15 fee on a $100 advance for two weeks amounts to a 391% annual percentage rate, or APR. That’s high when expressed as an annual rate, but keep in mind that the typical term of these loans are a few weeks so when taking that into consideration the fees are not so bad. One thing to consider is that the annualized interest rate on the average short term loan is much lower than it would be for the fee on a bounced check, a late mortgage or a late credit card payment. In the long run you very well could be saving yourself some cash.
It is important to remember that good short term lenders clearly disclose their loan terms and conditions, including the dollar amount of any fees and the APR. One of the reasons online loan search engines are a good way to seek out short term loans is because they have already one the research. Even though short term lenders are regulated and supervised by state agencies as well as the new federal Consumer Financial Protection Bureau, there are still those out there who are not as honest as they should be. Online loan search engines take the guess work out of finding the right lender.
Online loan search engines do their due diligence on their short term lending to determine whether they are following state and federal laws, have established written regulatory compliance and anti-money laundering programs, follow trade association best practices and obtain from valid customer authorizations for automatic funds transfers.
So are short term loans a bad thing? No, for millions of the underrepresented middle-class a short term loan can be exactly what is needed in an emergency. The key is to use a reputable service such as an online loan search engine to locate and work with the right short term loan company.