Personal Loan Lenders

Are checking account advance loans better than payday loans?

Banks are jumping into the payday lending bandwagon by offering a product on similar lines as traditional payday loans. The erstwhile payday lenders are feeling the heat with some of the top banks in the US offering Checking Account Advance or Ready Advance Loans. which they say, have better terms and conditions for the borrower.
Let us find out the terms and conditions for a payday loan first. They are offered for an average term of 14 days with the average fees coming to $16 per every $100 lent. This is equivalent to a high interest rate of 417 percent. Compared to this, the checking account advance that the bank provides has an average period of 10 days with $10 fees for every $100 lent. This means on an average, an APR of 365 percent. In short, the borrower are struck in a loan cycle of 212 days per year for a payday loan while for checking account advance, this period is 175 days per year

The advance loans provided by the banks are for a two week or a month long period. However, unlike payday loans which ask you to submit a post-dated check or give information of the bank to retrieve the funds, banks pay back money to them by directly accessing the customer’s checking account.

What the bank says – The banks that offer these checking account advance loans are Wells Fargo, U.S.Bank, Regions, Fifth Third Bank and Guaranty Bank. These banks stress on the fact that the fees that they pay on these loans are quite less and that they do not have to go through the eligibly procedure because after all, they are the checking account customers of the bank itself. Wells Fargo, which charges a competitive fee of $7.50 per $100 borrowed, says that the money lent is for emergencies only. U.S. Bank which charges $10 for every $100 loan, reports a satisfaction rate of 96 percent among consumers.

What the Consumer Financial Protection Bureau says – The government’s new consumer watchdog, the Consumer Financial Protection Bureau have criticized short-term lending, payday loans as well as checking account advances; and have stated that none are any better.

The CFPB and consumer representatives state that the act of the banks voluntarily taking back the money from the customer’s checking account makes the whole thing unsafe, can cause banks to lose customers and remain struck with uncollected debt. For the customer too, it can be quite harrowing to pay back the advance. They may need to divert their funds for other expenses and will find it difficult to pay back the money. Payday loans may extend you a new loan if the original one is not paid but banks will not even give you a second loan, if the first one is not paid in full. Secondly, for better or for worse, banks report repayment history to credit bureaus.

The CFPB has put forth a study by the Center for Consumer Lending which says that the banks are looking at this move as a new way to generate high income rather than actually help consumers. The Consumer Financial Protection Bureau has said that they will be closely monitoring the products that these banks are offering. Nearly 19 million Americans are using payday loans and banks are definitely interested in getting a sizeable share too.

Finding Personal Loans above $2500 from Reputable Lenders

Finding Personal Loans above $2500 from Reputable Lenders

There are a lot options in the market these days for loan settlement. Personal loans can be good choice because of the low interest rates. Yet, qualifying for any type of personal loan may not be that easy because of the lack of any collateral from the borrower to the lender. So, lenders resort to implementing secure and strict guidelines and qualifications for their personal loans especially if you talk about huge amount of money to be loaned.

Two of the most common types of personal loans from lending firms that can give $2,500 to $5,000 of loan amount to borrowers are the credit unions and P2P lending or peer to peer loan services.

Loaning Through a Credit Union

Credit unions operate like banking institutions, only that these are non-profit companies so they offer loans to their members at low interest rates. Before you can loan from a credit union, you have to be a member of the organization. These firms usually exist where there is a common denominator among members, be it from a company, a club or association, a church, or a community.

The goal of every credit union in terms of loan making is to aid the members who are in need of financial support, thus, the reason for it being a non-profit lending agency. In order to qualify for a personal loan, as a member you are obliged to shell out a certain amount of contribution on regular payments as the money received from the members will be used for loans and other purposes.

P2P Lending

Otherwise known as peer-to-peer lending or social lending, P2P lending is a type of lending transaction between peers or colleagues without any involvement of a financial or lending institution. Peer-to-peer lending is born out of the Internet technology, so you can find various P2P sites online that offer loans.

P2P lending sites are categorized into two: friends and family and stranger-to-stranger. Loans provided by the former usually have lower interest rates almost similar to that of government education loans. The latter require a minimum credit qualification and usually charge higher interest.

Compared to banking institutions, peer-to-peer lending has lower interest charge, which is often below 10 percent. This type of loan is attractive to borrowers who did not qualify for bank loans due to issues with credit standing.

Banking Institutions

The bank is known for rendering lending services, and guarantees a secure type of personal loan. But the eligibility will determine one’s qualification for a loan. One very important aspect is the credit standing. Since banks are secured and reputable type of lenders, they also have to be assured of guaranteed monthly payments from the borrowers. The downside with loaning from a bank is the high interest rates.

Personal Loan Lenders