People work hard for stability but some instances in life are just inevitable. There may be situations where people would need some quick cash (for some reasons) and the fastest way to have it is often through borrowing. Thence, it is no surprise that credit unions and other credit-issuing institutions are continuously growing in popularity these days.
Lending services may come in traditional banks, online peer-to-peer lending, credit unions, payday loans, microfinance, and crowdfunding. But since most of these issuing services may demand tons of requirements to approve an application, people would likely opt for alternative lenders where borrowing can be more convenient as possible. Good news, text loans are designed to make borrowing much easier for customers.
So, what are text loans?
As the name suggests, text loan is an alternative lending service where customers take out a loan from a direct credit issuer in the form of a text message. This way makes this service much quicker and easier compared to previous, traditional lenders. Additionally, text loan is a short-term loan with high interest, which is somehow similar to payday loans. And which is why is often referred to as “payday loans with a twist”. The only difference is how each of them works when it comes to the application and issuance of credit.
How do text loans work?
Step 1. Borrowers must create an account with the issuing company before they can apply for a text loan. As part of the registration process, borrowers will encode information regarding their income and outgo. This way allows the lender to evaluate the borrower’s affordability to make a payment for each credit.
Step 2. After signing up for an account, borrowers will get a PIN (Personal Identification Number) which they will use as a confirmation of their identity with all succeeding loan applications. Their account will be linked to their mobile phone number and their pre-arranged bank account.
Step 3. The first loan must be applied online, which means they can only use the text loan service upon payment of the first loan. Take note that application for text loan can be accomplished in just a few minutes. A borrower sends off a text message to request for a particular amount of loan. If the loan application is approved, the creditor will immediately transfer the money to the debtor’s bank account during regular business hours.
What are the pros and cons?
A text loan can be very useful when it comes to sudden and unexpected expenditures, especially when not everyone may have the financial capacity to settle those expenses on a short-term basis. This is one of the major motives why people with very constrained budgets and limited credit availability would often take advantage of short-term loans to primarily satisfy their abrupt expenses. Plus, the convenience of a text loan application is another factor that often draws the market demand.
But just like any other services, text loans may have their drawbacks too. For example, the convenience associated with these loans often comes at a very steep price range (usually from $100-$1000) plus a high-interest rate. Hence, qualified customers must have the capability to return the principal amount including the associated fees or interest strictly within the term that is described in the agreement. Another drawback of a text loan is what customers can get from consistently relying on this service. Customers who keep on using a text loan service may eventually find themselves bogged down with serious debt/financial crisis. Mainly because some extra charges on the loan would often increase and eat away the money that these customers could be saving instead. Bottom line is that customers should use a text loan service smartly to avoid later unwanted results.