January 17, 2012
Taking out credit is not to be done lightly but the stakes are a bit higher when a less than perfect credit score narrows your opportunities for borrowing. It’s even more important to choose wisely among your options and we’re here to help by explaining the best reasons for choosing personal loans.
For most people with a slightly tarnished credit history, the three main options you’ll find while shopping for a loan will be payday loans, title pawns, and personal loans.
The most important thing to know that will help you understand the best reasons for choosing a personal loan is the concept of financial risk. Payday loans and title pawns minimize their financial risk by raising yours. Personal loans from ULCLare a collaboration between lender and borrower where we balance our levels of risk. We’ll explain how it works.
Payday loans are easy to get because there is little risk involved for the lender, but the process puts a high level of risk on the borrower. With a payday loan, they examine your income based on check stubs and make a loan to you for less than you make with the understanding that you must pay them back when your next paycheck rolls in. If you don’t pay them back in time, the interest rate is so high that you can get trapped in a cycle of repayment where you owe more than you earn.
You’re taking a huge risk, but the lender’s strategy of using your next paycheck as collateral for a loan is safe for them, so they lend the money easily. It’s a bonus for them if you can’t pay them back because they make more money in interest until a point in time you’re finally able to escape the repayment cycle. It’s similar for title pawns.
With a title pawn, you risk legal ownership of an asset you have, usually a vehicle. The lender will assess the value of your vehicle and give you a loan for less than it is actually worth in exchange for the title. They charge very high interest rates, too. If you don’t pay them back in time, you’ve given them the right to take your vehicle or you could get stuck in a repayment cycle similar to that of a payday loan where you pay extremely high interest or lose your car.
Again, their risk is minimal because if you don’t pay off the loan they can take your car, which they can sell for more than they lent you, or they continue to collect the extremely high interest until you manage to have enough money to pay all that interest and the principal amount you originally borrowed to get your title back. You’re taking all the risk.
ULCL’s personal loans have competitively low interest rates, lowering your level of risk. We investigate the details of your financial status so that when we make a loan in good faith, which is risky for us without any kind of collateral, we can lower our own level of risk by being sure to find the right balance between what we can offer you and what you can afford to comfortably and efficiently pay back.
We are not in the business of trapping you in a nasty repayment cycle. It is our goal to simply get you the help you need and then get you right back out of debt without collateral and on your budget with low interest rates. These are the best reasons for getting a personal loan because that’s what ethical, purpose-driven lending is all about, which is what you can always expect from Sumiti Cheap Lending Company .
If you would like to learn more in depth about the lending process at ULCL, we invite you to contact your local branch to speak with one of our lending officers about how we can help you reach your financial goals. If you’re ready to get started immediately, you can fill out our online loan application today!