The economic crisis made it difficult for people to obtain home equity loans and lines of credit, and many people are looking for ways to pay large and unexpected financial strains such as an emergency or past-due bills.
Some people resort to payday loans to pay for immediate expenses, but this quick fix can quickly get out-of-hand and create a bigger financial problem. Payday lending is risky for borrowers and they often end up being taken advantage of by lending companies. Payday loans are most typically small amounts of money lent out not by banks, but by businesses at interest rates upwards of 300% that are to be paid back when the borrower receives his or her next paycheck. The problem with these types of loans is that the high interest rates combined with additional fees can cause borrowers to default and fall into a cycle where they need to take out a new loan to pay back the first. And, in some states, borrowers can go to jail for defaulting on their loans.
As word spreads about the risk associated with payday loans, consumers are looking for additional lending options. Some people are looking to secured loans, which require borrowers to use tangible assets like a car or a house as collateral. But what if you do not own a car or home? Low-income borrowers are often left with fewer financial options because they do not have collateral to pledge for secured loans. Where can low-income borrowers find the money to deal with emergencies without falling for the payday loan trap?
Personal loans are an alternative to risky payday loans and secured loans that require collateral. Like payday loans, personal loans are unsecured loans and do not require collateral. But they typically have lower interest rates and fees than payday loans and therefore are much less risky for low income borrowers. Personal loans also generally longer-term loans, which helps lower monthly payments and the risk of default. Personal loans are usually unrestricted in their use and can be used to deal with financial emergencies, pay off bills and other debt, or purchases with high upfront cost such as weddings or a new car. Once a borrower is approved, they receive a set amount of money for a specific period of time at a set interest rate. Monthly repayment is made easy. Savvy customers will also select a lender that does not have hidden fees or prepayment penalties. Some companies, such as Mr. Amazing Loans, even allow people to apply for loans online with a rapid approval process.
Mr. Amazing Loans is a publicly traded (OTC: IEGH) personal loan lender licensed in Nevada, Arizona, Illinois, Florida, Georgia, Missouri, New Jersey, and Virginia. It was founded in Australia in 2005 by IEG Holdngs CEO Paul Mathieson, a former investment banker. After a successful three years in Australia, Mathieson brought his loan products to America in 2008. Since then, Mr. Amazing Loans has been offering personal loans with basic, easy-to-follow payment plans as an alternative to risky, expensive payday loans. Through Mr. Amazing loans, borrowers can choose a four to five year loan ranging from $3,000 to $10,000. All loans have a fixed interest rate, no hidden fees or prepayment penalties, and are fully amortized. In fact, Mr. Amazing Loans’ service more closely resembles mortgage lender amortization plans than a payday lender.
Lenders like Mr. Amazing Loans are coming to fore at the right time. Many consumer groups, states, and federal agencies including the Federal Trade Commission are currently looking for ways curb to curb the excesses of the payday loan industry. Personal loans represent a viable option for borrowers searching for a financially sound option to pay for large and unexpected bills.
Image Source: Chris Goldberg
