Is there any more popular way to borrow than a quick payday loan online? We are probably forgetting that so far not many of us have had the opportunity to borrow officially.
More recently, a consumer loan has only been a privilege of the middle class. Meanwhile, the less well-off had to borrow from relatives. Or, of course, own resources, whatever they may be.
Who, Where, How, and Why: A History of Fast Payday Loans
This is a difficult situation. No one could even think that there would ever be such a thing as instant payday loans that would be available to practically everyone.
Although they appeared earlier, online borrowing was most popular during the financial crisis. Many people lost not only part of their income or savings, but also their jobs. In these circumstances, ways of plugging the resulting financial holes were sought. And this is where instant payday loans came online. It is because of them that so many people have been able to move forward and buy time to deal with their situation. Such an urgent payday loan was a real salvation for many in need of money. Do nothing – unfortunate stories have happened. But about everything from the beginning.
As we mentioned, quick payday loans were offered even before the crisis. However, with the growth of the economy and wages in Lithuania and the many opportunities for emigration in Europe, not many people became interested in this service. Realizing this, the creditors did not even intend to actively promote their services. Abroad – where this service came from – things were different because the service had much deeper roots there.
However, things have changed with the onset of the economic crisis. Then many of the fast payday loan providers were well aware of the situation. They had a lot of capital, so they realized the need would be very high. Still, people lost their jobs, savings and / or income. In these circumstances, there will be an enormous need to somehow deal with the resulting cash holes after making other financial commitments. And here’s the quick credits …
Since the credits were originally provided by foreign capital, the latter rushed to increase its presence in Lithuania. After bringing in more capital here, he started a boom in fast loans. In the beginning, online loans were not as popular as SMS credits. In most cases, provincial residents who did not have Internet access and / or were not able to use it were looking for instant payday loans. Therefore, the bulk of the borrowing consisted of loans that were provided via SMS.
In addition, a very large proportion of all loan seekers were unemployed, meaning people lost their jobs and income during the crisis. We may have forgotten it now, but quick loans to the unemployed that year were as easy as others. It is not surprising that thousands of people who have lost their jobs have rushed to take advantage of this opportunity. Often without even thinking about the specific consequences. Just in Lithuania at that time there was no culture of borrowing or financial literacy. For this reason, instant payday loans have created as many problems as they have solved.
Problems with Quick Loans
When you borrow with no income to cover your loan – you play with fire. This was also the case for many of those who were granted emergency loans during the crisis. After losing their jobs and all their income, people rushed to borrow. Unaware or unaware that these loans would have to be repaid very soon, they began to see problems there.
Since such loans are based on a formal contract, the person is obligated to make credit payments. Failure to do so may cause discomfort. One of these is fines for late payment of each installment. Penalties that are not one-off but accrue for each day of late payment.
Not to mention that not only the people but the state did not have much experience with quick loans. Therefore, the latter acted with great caution and initially did not interfere in these transactions between people and creditors. However, it did come at a cost. The result was that lenders had a great deal of freedom to set whatever interest rates they wanted and penalties for late payment. Very often it was very expensive. Sometimes a customer borrowing just a hundred euros could pay up to several times the number of fines late to repay the credit! This state incapacity had consequences.
Therefore, it was subsequently decided to deal with this situation. Restrictions on the granting of fast credits were introduced. As a result, loans to the unemployed were no longer granted. Nor could they be granted to those with limited incomes or over-indebtedness. The income and debts of other family members (such as spouses) were also taken into consideration before the opportunity to lend began.
The situation with online loans today
Today, the situation is completely different than it was before the crisis. While SMS loans predominated in the past, nowadays the majority of loans are made online. As Internet users grow, the number of borrowers naturally increases. It’s not just a matter of simplicity.
It may be conceivable that borrowing by phone, ie SMS, is even easier than using the internet. But unlike sms credits, online loans are much easier to compare. It is easier to visit several different online creditor pages. This gives you an idea of the real market situation and helps you to choose the cheapest instant payday loan. But there are other benefits. For example, online loans have their pages comparing prices and terms. They make it easy to look at today’s online loan terms offered by different lenders.
This is one of the most important arguments why online loans are growing in popularity. And while loans are no longer accessible to everyone as easily as before, this is where the future of the market lies, especially after the financial technology revolution, which has made loans even easier for everyone.