Thousands of Canadians have needed alternative sources of funding in one way or another. Some of them have needed to pay bills or consolidate their installment loan. Others have needed money to keep their business afloat. No matter the reason, alternative lending can be enormously helpful in aiding individuals with their financial needs while avoiding the stress and uncertainty of traditional banks.
Benefits: flexible terms
One of the reasons why most individuals consider an installment loan is the flexible terms that it might provide. In traditional lending scenarios, there is usually a fixed system of payments that emerge. An individual agrees to pay a particular amount by a particular date every month for one year or several years. This system has been established for hundreds of years in Canada and is not changing anytime soon.
Some banks even require that a person meets with a banker in person for installment loans. This loan process has become challenging in recent months. A large number of banks around the country have shuttered their lobbies and are only allowing for one individual to have an appointment for loans at a time. An individual may have to spend days or weeks waiting for one of these appointments.
These loans terms are followed by the vast majority of banking institutions and even many credit unions. But they are not constraints for an installment loan company. Alternative lenders are helpful for anyone who needs installment loans and whose business does not fit into the traditional narrative of bank-oriented financing. For instance, there are a large number of businesses that are seasonal and have income flow in at certain parts of the year.
An installment loan company can structure payments so they are due only in the months with a considerable amount of income. They could also have terms where an individual is allowed to miss one or two payments per year in exchange for a higher interest rate. This structure may be beneficial for individuals who have cash flow problems and are not always able to make their payments.
Vulnerable potential customers
Alternative lending also helps a different customer base than traditional lenders. Banks require a wide variety of basic limits to be met in order to lend out money. They want a decent credit score and often have strict requirements for putting money down and making regular payments. A large number of credit-worthy and trustworthy individuals cannot meet those needs.
Alternative lending has a different network of requirements and concepts behind it. It has a number of financial instruments that are tailored to people who have not been well-served by the traditional banking system. People with poor credit scores still need money. They are often willing and able to pay the large interest rates that make sense for their credit risk. An alternative lending company will be able to make a considerable amount of money lending to these men and women across the country.
Convenience is an essential part of any alternative lending arrangement. A large number of alternative lending companies are online. Once an individual has secured the loan, it is deposited electronically into their account. In many instances, they can complete the entire loan and deposit process in a matter of hours. After an individual receives all of this money, they can pay it back through a simple process on their phone or computer.
Some alternative lending companies have automatic withdrawals which allow a person to pay off their bills without checking their account. A handful of these companies also have apps where a person can log into their phone and pay their bill. These apps use the haptic systems of most phones in order to provide an extra layer of security. It is also convenient for an individual to end these arrangements if they need to.
What to do
Anyone who is looking for an installment loan has to start by determining their needs and situation. Individuals will have a significantly different set of needs from alternative lending than companies. These differing needs will change the terms and specifics of alternative lending. For instance, one of the most common needs for an installment loan is as a short term loan. It is an entity that helps a person before they receive their next paycheck. In such a situation, a person is going to need to focus on the smallest loan that they can possibly receive. They know that the terms will be strict and the interest rate will be considerable.
There are also consolidation loans. Consolidation loans are loans where an individual takes money and uses it to pay off a wide variety of debts that may have poor terms or massive interest rates. Consolidation loans eliminate all of those complexities and turns an individual’s debt load into one set of payments with one single interest rate. It will allow a person to pay less and meet their debt obligations faster.
In the case of a business, the situation is significantly difficult. A large number of companies have continued lending needs. They may borrow money several times a year in order to pay bonuses or cover a large repair. Many companies sustain their income with a handful of large contracts that pay out only once or twice a year. Before those infusions of cash come in, banks and installment loan companies are critical. A company needs to structure its lending policies in order to make sure that the loans are meeting its needs. A large number of companies would want to open up a lending line instead of a single loan. This line will allow them to keep receiving money whenever needed and pay that money off at either a fixed or variable rate.
Alternative lending can be the secret solution to many Canadians’ financial problems. With consolidation loans, they can reduce their monthly payment by hundreds of dollars and start to get a handle on their debt. Seed money for a new company and installment loans can help make an individual’s entrepreneurial dreams come true. All of these actions are essential to making sure alternative lending can be the way forward for any individual.