Are You a Slave to Online Personal Loans? You Are Not Alone.
According to the Fed, Worldwide personal loan balances stood at $42.3 trillion as of July 2016
In most developing nations around the world, consumer access to traditional bank loans has almost entirely been replaced by instant, Payday-type online loan products. According to the U.S Federal reserve bank. the value of consumer loans, at all commercial banks, as of July 2017, stands at about $1.380 trillion in the United States, alone. Worldwide, consumer loan balances, at the beginning of 2016 were $42.3 trillion.
Investors have pumped trillions of the dollars into the subprime consumer lending category. Demand for these types of loans has skyrocketed over the last decade. Mostly fueled by the wide use of mobile technology around the world. Financial institutions now have the ability to market loan products to consumers in various, previously, unreachable parts of the world.
At the intersection of technology and availability of cash is where one can find easily-accessible loans. As a result, most people are glad to apply for loans from the comfort of their homes or offices. Once you have given the correct details, the money is either sent to your bank account or mobile phone.
Repayment period categories, for these types of loans are grouped according to the amount of money one borrows. Short term loans or emergency loans are quick cash and are repaid within 30 days from the day of request, in most cases.
What is an Online loan?
Online, or Mobile loans are loan products that are marketed via mobile apps. or online platforms. These loans are typically financed by a single institution or by a collective of investors looking for higher rates of return compared to a traditional loan product. These types of loans are typically marketed to borrows with lower credit ratings. Access to funds from these types of loans is usually instant with very little paperwork required.
Why online loans can be burdensome
On application, it looks easy to repay the loan, on which you are advised to make small payments weekly, or monthly. Such repayments are a burden if one does not have a stable source of income or is undergoing severe economic hardships.
Common pitfalls
Most people strive to maintain a respectable credit score and would want to avoid any action that might result in an adverse impact on their credit ratings. Therefore, once a deadline approaches and one has no cash for repayment, they will, usually enroll in another online application to get repayment cash.
What happens? One has just applied for another loan to clear another. The backlog begins here, whereby one ends up having different loans in lending firms.
Getting back on track
Most banking institutions and other types of lenders will allow you ta make minimum payments till you get back on track, financially. These minimum payments will allow you to avoid late payment repercussions while you work to "get yourself together".
One can always tap into the fiends and family pool to access some short-term cash to get yourself out of your predicament. It is super important, as a first step to resist the temptation to avoid your lender all together: That never ends well for you. Instead, put your grown-up pants on and have a conversation with them.
Explain your situation and work out some kind of deal to give you the room you need to resume regular payments. You will be surprised at the willingness for banks to work with you when you woe them money.