Same day loans: extreme necessity
The problems of short-term lending via the Internet are being actively discussed now. It seems that the user turns to an intermediary who finds him a creditor, and using the minimum amount of information and documents, the person receives the necessary money, but at huge interest rates. Much has been said about the shortcomings of such a system. But no matter what they say, such a system greatly helps people in need of urgent money.
Indeed, getting loans from banks is much safer, the rates there are much lower, but this procedure takes several weeks, you need a lot of documents, and your credit history should not be tainted. Therefore, the overwhelming majority of Americans choose online lending. You could even say that Americans are ready to pay crazy interest for the speed of loan disbursement.
Yet even disbursing loans the day after applying is no longer fast enough for American citizens to meet all of their needs. Recently, more and more voices have been raised in support of approving the issuance of same day loans.
What is such a rush for?
Every person in life has come across a situation when it is necessary to urgently pay for the service of a master, but there is no money at hand. It does not matter whether the water pipe has broken, whether it is necessary to pay the bill to the veterinarian or doctor in the absence of insurance, such situations cause great inconvenience in the absence of money here and now.
However, such loans, which would give out an amount of money immediately after submitting an online request, are not issued, and most likely, they will not be available on the market in the near future. There are many reasons for this, and first of all, there are great risks for the lender.
An organization that will issue such loans will need to solve a number of problems, ranging from the development of a special application, with a database of users, and ending with the proposal of legislation for ombudsmen, since it will be very difficult to withdraw money without legislative norms, and even with interest.
Nevertheless, the huge customer base fueled by the increased demand for same day loans in today’s American society is prompting financial lending companies to increasingly consider the possibilities of making overnight loans a reality. Indeed, if successful, such activity promises large profits for credit institutions. Let’s take a look at the main risks for both credit institutions and loan recipients in such a situation.
What problems can arise
The first and biggest obstacle for credit institutions to issue loans in one day will be the problem of assessing the client’s credit capabilities. Even now, when issuing loans on the second day after receiving an application, many organizations are faced with the impossibility of paying the debt by recipients. And if earlier such an unpaid loan could bring interest to the organization, then recently a number of laws that are being prepared for adoption can significantly complicate the life of credit organizations.
For example, if the client did not repay the loan for a year, then the interest could rise and reach up to $ 1000 of the original amount. Now, more and more ombudsmen are demanding that the benefits for companies be limited to 300, and sometimes up to 200% of the loan amount. It turns out that if the debt is not repaid, this money will stand idle, and the interest will not fully cover the costs of firms.
The second problem may be the lack of a legal framework for the operation of such companies and applications. Already, online applications for issuing quick loans are banned in 13 states, and no one knows what will happen in the future.
It should also be mentioned that the speed in issuing loans is not very beneficial to lenders, in contrast to the recipients of loans. Too much haste does not always lead to profit. Why issue loans on the same day, when the benefits of loans issued on the second day after the application more than cover all the requirements of financial institutions. All of the above makes the task of issuing same day loans difficult, and difficult to accomplish for widespread use in practice. But the demand is there, and it is huge, which means that the supply may also appear soon.