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Payday Loans on the Internet Have Their Risks
If you have insufficient credit, or a previous bankruptcy, it can be difficult to take out a loan from banks or credit unions. The payday loan industry was created to offer short term financing to customers with little credit, and the industry is doing brisk business. There are now more payday loan stores in the United States than Burger King, Subway and McDonald’s restaurants combined.
The interest rates, or “fees” charged for payday loans can add up to 400% per year on an annual basis. While they may be expensive, payday loans are, indeed, easy to obtain, and borrowers need only have a checking account and a steady job to qualify.
An extension of the brick and mortar cash advance loan business is the Internet lending business, and there are now thousands of Web sites that offer short-term financing. The businesses say that they can put the money straight into your bank account in as little as twenty four hours. The simplicity of doing business right from your PC, rather than driving down to your local lender, has encouraged untold numbers of people to borrow money online. Internet loans are just as easy to acquire as financing from payday loan stores and they are open for business 24 hours a day. Consumers should be aware, though, that borrowing from online lenders can be rather dangerous.
The risks tied to taking out a loan from online lenders include the following:
Unclear terms – If you live in Kansas, your neighborhood lender is subject to banking laws established by that state and you are protected by those laws. If you borrow online, the transaction is subject to the statutes of the jurisdiction in which the lender resides, but you may not be protected. If the lender is located outside the United States, there may be no caps of any kind regarding how much interest they may charge you. There may also be no recourse if the online lender doesn’t honor the terms of your agreement.
Potential identity theft or credit theft – By providing personal financial information to total strangers over the Internet, customers face the risk of having their identity stolen. Identity theft is a rapidly expanding crime and individuals who engage in it are becoming more proficient by the day.
Financial risk – Due to the fact that online lenders put money into your checking account, they could potentially take money out of your checking account, as well. Stealing from your account is a potential risk of engaging in business with an Internet company. You simply do not know who the online lenders are or what their motives might be.
If you have to apply for a cash advance loan, you would be safer in doing so locally and in person, rather than on the Web. There are frequently alternatives to high priced lending, and you would be smart to find them rather than to borrow money at high interest.
Unsecured loans: no need to burden your pleasures with unnecessary risk
The business of unsecured lending is gaining a strong foothold in the UK loan market. Instances of home repossessions are increasing at an alarming rate in UK. This is gradually shifting the tide in favour of unsecured loans.
Who would wish to lose his home while trying to meet the needs of life?
Nowadays, people in UK are quite apprehensive of pledging their homes to raise finances. They prefer to go for risk-free financial means to cater to their needs and desires. Unsecured loans are offered in the absence of collateral security. So, both the homeowners as well as the tenants are eligible for an unsecured loan. Unsecured form of personal loans not only reduces the risk for a borrower, but also offers freedom and flexibility in the usage of loan money.
However, lack of security poses a hindrance in the easy availability of unsecured loans. The risk factor is quite high in case of an unsecured form of a loan, as compared to secured loans. There is no collateral to back up the loan money. As a result, lenders run a risk of losing the money in case a borrower fails to repay the loan due to some reason.
The lenders counter the risk factor by imposing stringent terms and conditions, approving only a small sum of money and charging a comparatively higher rate of interest (as compared to secured loans).
You can avail a competitive deal of unsecured loans if you have an impressive credit score. So, get a report of your credit score from Experian or Equifax and bargain for a favourable deal.
Lenders also put emphasis on the employment stability of borrowers while approving an unsecured loan application. So, if you are employed, arrange documents that prove your employment stability.
Last but not the least, shop around as much as possible so that you can select the deal best suited to your needs. You can save your time and efforts substantially by doing online shopping for unsecured loans.