The Boom of the Payday Loans Market

A payday loan (also called SMS loan) is a cash advance that you can get and pay using your next paycheck. Payday loans have gradually become very popular among people from different socio-economic status. The credit crunch and a variety of other challenging financial situations facing many people have increased the market for payday loans. Market research indicates that approximately, for every seven banks there is one payday loan agency. The same has happened in other parts of the world, especially some European cities and countries like Göteborg, Sweden, Finland, Germany, the UK, etc.

Payday loans are therefore booming because of the convenience they promise borrowers. Although the payday loans were created to solve financial emergencies, more borrowers are getting into debt when they fail to pay up at the end of the month. Borrowers caught up in debt end up being victims of home foreclosures and other financial difficulties. The viability of payday loans as a solution to tight financial situations remains in question.

The first mistake that most borrowers make is to take up payday loans when they do not have any emergency. Payday loans attract interest rates, a fact that most borrowers do not strongly consider before applying for one. However, there are pros to payday loans just as there are cons.

Pros of SMS Loans

Payday loans are attractive because they are so easy to secure. The payday loan lenders do not take a long time to process applications. Borrowers can get their money in the bank account as soon as 24 hours after placing a request or even an hour. People who have emergencies find this very convenient.

Payday lenders are not keen on carrying out a credit rating check before they qualify a borrower for a loan. Any borrower can get a payday loan if they are having money problems. Banks and other lenders do not offer this level of leniency.

Borrowers who pay back their payday loan in time increase their chances of getting a higher loan the next time they apply for one. Regular borrowers are rated higher than new or occasional lenders. Borrowers are therefore encouraged to keep borrowing and paying back in time to improve their profile.

Cons of SMS Loans

Payday loan lenders do not consider your credit report when you are applying for a loan. However, failure to pay your payday loan in time will reflect on your credit report. Therefore, only people who are sure of where that they will pay back the loan should apply for one. We recommend that you jämföra (compare) multiple lenders before getting a loan.

Payday loans attract very high-interest rates. In comparison to banks and other lenders, these interest rates are extremely high. It is more affordable to get a loan from your bank than to get a payday loan.

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How to Find the Right Financial Institution for a Short Term Loan

imagesOne of the biggest problems that people have is that they don’t always have enough money. Many people don’t have great salaries, and those who earn more also have one or several credits. Because of this, many people don’t get to have enough money from one paycheck to another.

What can you do if you find yourself in such a situation?

One solution is to get money from a friend or your family members and pay them back very soon. However, you can do this only once or twice, as they don’t have an excellent account either.

When you need money fast, you can go to a financial institution and ask for a short-term loan. Here’s how you can find a great financial institution and what you need to know about short-term loans.


The Need

First of all, you need to have an excellent reason to go to a financial institution and ask for a loan. No matter what kind of loan you have in mind, you don’t have to take money from a bank or a financial institution for paying your bills. If you can’t afford to pay your bills from the salary, then you won’t be able to pay back the loan in due time. It’s a very simple logic, and you need to have a clear mind when choosing a loan.

If you need money to make a major purchase, and you don’t have enough, or if you have an emergency situation, then these could be good reasons to get a short-term loan.


The Research

Before going to a financial institution, do a thorough research about what a short-term loan means. You’ll find out that they payment of the loan is in less than one month – usually – and the interest rate is higher than with a bank. The financial institutions have many clients because they offer short-term loans even to those that have a history with bad credit, so you’ll be able to use them if it’s necessary.

Searching online is a good option, and you will find plenty of companies that activate in the SMS loan or payday loan industry. All you’ll have to do is sign up with them and see if you are eligible.


Eligibility

The financial institutions don’t have a scoring that you need to fill as the banks have. However, they will do their research and see if you are eligible to get a short term loan. Because you’ll have about 30 days to give them back the money, the lenders will need to make sure that you have a steady income, a job and the possibility to pay back the money.

They don’t care if you have paid your credit rate or if you have other problems with your finances. However, if their research shows that you are not eligible to get the money that you want, they will make you an offer for a smaller amount of money.

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Paying Attention

No matter why you need to take a loan, you have to make sure that it’s possible to give back the money. When you sign the contract, is important to read everything that the contract says, even the fine printing. There could be
clauses that you don’t agree with, so it’s important to know all the details.

If you feel that you don’t know enough, always ask the agent to answer all your questions regarding the credit that you plan to take and the money that you’ll have to give back.