How to Choose a Credit Provider?

How to Choose a Credit Provider

Choosing a creditor that will meet the needs of a potential borrower is a difficult task. At present, the number of microfinance institutions (MFIs) that provide quick payday loans is constantly growing. The choice of loan products is huge, so finding the best creditor to apply for is difficult for many consumers, especially given the misleading advertisements.

The worsening epidemiological situation in the country increases the demand for loans, allowing fraudsters and unscrupulous companies to take advantage of an unfavorable situation for profit. Thus, before applying for a loan, you need to pay attention to finding a creditor. Riad the advice given by WebCE.

How do MFIs work during a pandemic?

The fast lending industry, like other sectors of the economy, has been hit hard by the coronavirus.

The main threat to MFIs during the crisis is the massive emergence of late payments.

In the context of the spread of the coronavirus, borrowers lose income, which is the only source of funds to meet loan obligations. Numerous MFIs are likely to be underperforming and face enormous problems due to interruptions in the loan repayment process. Companies will simply not have enough funds to issue new loans. Moreover, the mandatory requirements for the formation of reserves also exacerbate their situation.

Therefore, MFIs during the COVID-19 pandemic:

  1. Make changes to rates;
  2. Tighten requirements for new customers;
  3. Provide loans online;
  4. Provide fast loans;
  5. Offer the ability to transfer payments;
  6. Refuse loyalty programs.

If there is demand, microfinance institutions simply will not be able to meet the needs of potential clients. One of the possible consequences of such a change in the market will be the tightening of requirements for borrowers.

Some companies continue to work with clients as usual, but this does not mean that creditors will remain unchanged over time. Thus, in order to conclude a profitable and safe deal, you will have to find a reliable organization, paying attention to several important factors at once.

How to choose a reliable creditor?

Responsible lending involves careful planning of the application process and negotiation of the terms of a future deal. When a potential borrower collects information about a lender, there are some important tips from experts to consider. When choosing an creditor and a loan product, you need to answer five simple questions.

Question 1: What loan do you need?

Before you start looking for a credit institution, you should decide on the specific purposes of borrowing. It is important to understand that different companies specialize in providing certain types of loans.

A potential MFI client needs to clarify:

  • Optimal maturity;
  • Required loan amount;
  • Method of receiving money;
  • Method of debt repayment;
  • Possibility of receiving discounts.

Depending on your own needs and financial capabilities, you can find the best loan product. If you ignore this advice, the consequences can be fatal. Fast loans remain one of the most available and expensive forms of lending.

It is better to postpone applying for a fast loan in the following situations:

  1. The borrower does not need urgent financing and can wait for a decision on the application from any bank;
  2. The borrower has access to alternative forms of lending with much more favorable terms than in an MFI;
  3. The borrower needs a loan for a period of six months to five years or a targeted, secured and long-term loan;
  4. The borrower plans to make a purchase that does not correspond to the current level of income.

Cooperation with non-bank credit organizations will allow you to immediately receive the amount necessary to pay off unforeseen expenses. The loan will have to be repaid in a limited time, while paying a daily commission.

Once the borrower has decided on the purpose of lending, it will be possible to focus on choosing the right creditor. To do this, you will have to compare the conditions of the available rates with the planned tasks.

Question 2: What is the reputation of the creditor?

Financial experts recommend scrutinizing creditors’ reviews. This applies to both MFIs and banks or, for example, pawnshops. You should trust reputable companies that have long-term experience in the lending market. A large number of negative reviews indicates problems in building not only a customer service system but also a marketing campaign to promote services.

The following factors affect the reputation of any lender:

  • Level of loyalty to borrowers;
  • Mentions in the press;
  • Reviews by financial experts;
  • Customer reviews.

The fact that the company has been in the market for many years affects the amount of useful information about the quality of service. In the meantime, reviews affect the image of the creditor. Positive responses indicate the quality of the services provided.

Question 3: What are the loan requirements?

When applying for a loan online, you need to find out the conditions offered by the company in relation to the use of certain loan products. Requirements for borrowers deserve special attention. If the client does not fully comply with the creditor’s requests, the application will be immediately rejected with a subsequent deterioration in the credit history.

Common loan requirements:

  1. Be at least 18 years;
  2. Be a legal citizen/resident of the U.S.;
  3. Have a state-issued ID;
  4. Have a valid phone number.

Microfinance organizations are interested in clients who can pay off debt. However, in the process of applying for a loan, proof of income is not required.

The lender has every right to put forward several additional requirements for clients. In particular, some MFIs ask to provide a photo of the borrower. Nevertheless, payday loans are indeed available to unemployed persons, retirees and students.

Important! Lenders insist on verification of payment details in case of crediting money to cards or accounts. The procedure involves the transfer of a small amount, which is returned to the payer after confirming the data. Debit cards and identified e-wallets are suitable for obtaining fast loans online.

Question 4: What are the MFIs’ lending terms?

Microfinance companies are often limited to one tariff plan, although the largest organizations are expanding their product lists in order to attract customers. However, lenders usually determine the limits on the maximum loan amounts and financing terms themselves.

Filling out the application, the client can choose the parameters of the transaction that suit him/her personally.

For example, first-time applicants can get up to $1,000, but regular users can get up to $5,000.

The client should pay attention to:

  • Minimum and maximum loan amount;
  • Minimum and maximum term;
  • The size of the daily interest rate;
  • Additional fees for money transfer;
  • Related services, promotions and discounts.

Information on requirements for borrowers and credit conditions is usually provided on the company’s website. In addition to the interest rate, clients must be informed about the types of fees they will have to pay when obtaining or repaying a loan. These fees include fees for executing financial transactions, loan extensions, and other additional services.

If you do not want to waste time looking for all the information about the requirements for the borrower and the conditions for each MFI, then we recommend using referral services that have collected the best offers for payday loans in one place. You just have to compare them and choose the most suitable conditions for you and apply for a loan online.

Question 5: Does the company have a loyalty program?

An important factor when choosing a creditor is the availability of promotions, discounts and other bonuses for clients who prove to be reliable in the process of loan repayment. Before the outbreak of the crisis due to the spread of the coronavirus, non-banking companies also developed attractive promotions for new customers.

The loyalty program means that customers are offered special discounts, deferred payments, free loans, referral bonuses, gifts, and points awarded for repaying loans.

Conclusion

Non-bank credit institutions continue to provide financial services amid the pandemic. The crisis has hit hard on the reputation of MFIs.

The risk of massive late payments has led to stricter requirements for customers, thereby provoking a sharp decline in the customer base. So far, however, some creditors are ready to cooperate on the same terms.

In order to avoid fraud and unexpected expenses, it is recommended to check several aspects of the MFI’s work when choosing a company offering fast payday loans. First, you will have to study customer reviews available on sites, forums or social networks. You can also form the correct impression of the quality of service based on the opinions of close friends, acquaintances or relatives who have previously used the services of MFIs.

Tags: credit, financial problems, loans, online lenders
Category: General
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