Alternative to Traditional Loans
The devastating aftermath of the recent crisis that hugely afflicted the country has revealed the innate vulnerability of the banking industry to adverse economic factors, political forces and global changes.
Due to the surprisingly huge number of defaults on mortgages, many banks have lost the financial strength needed to pursue their day-to-day operations and sustain their competitiveness in the industry.
While some banks have successfully managed to navigate the crisis, others were forced to close their doors. Thus, in order to help the banking sector emerge from the global slump and enhance their capacity to respond to a variety of potential financial threats, major policy makers have developed substantially tightened policies that aim to promote safe and sound lending practices. The criteria embodied in these policies require banks to evaluate the repayment ability of potential borrowers.
Although the intent of the newly implemented rules is to create a functional and secure lending system, their implementation has become a major constraint that limits the opportunities of bad credit borrowers to secure credit from commercial banks and other conventional lending institutions. With banks no longer a major source of immediate credit in the financial market, consumers are starting to rely on other lending options, such as cash advance loans to address all sorts of unforeseen financial pressures. Here are some reasons why cash advance loans are a good alternative to conventional bank loans.
Cash advance loans require no credit check
Credit check refers to the process performed by banks and other traditional financial companies to accurately verify the borrowerâ€™s financial capacity and willingness to meet a debt obligation. The process generally involves the collection of significant information available regarding the applicantâ€™s financial credibility and economic circumstances. The conclusion obtained from this analysis is used by lending companies to determine the borrowerâ€™s eligibility for a loan. In most cases, individuals with bad credit history have reduced possibility to access loans from lenders who conduct extensive and lengthy credit evaluations.
Unlike applying for cash advance loans, restoring an impaired credit history is excruciatingly difficult and may take a long time. Taking into account the difficulty of the process, a good number of private lenders offer cash advance loans to give consumers an easy and reliable access to sufficient financing, especially during tough financial emergencies.
Cash advance loans do not involve the use of big and expensive collateral
The use of collateral has played a pivotal role in the lending decision. Pledging collateral is a century-old method that has been employed by various lending companies to secure financial protection in case the borrower fails to pay in accordance with the agreed payment term. Because consumers are still struggling to survive the impact of the crisis, consumers are unable to invest in high-value assets that can serve as collateral to secure a loan.
Since cash advance loans fall into the category of personal unsecured loans, lenders who offer cash advance loans do not apparently require prospective borrowers to secure their credit with collateral. This means that borrowers can apply for cash advance loans even without a home, a car and other valuable properties that may be put at risk if they default on their loan obligations.