What is Making Unsecured Personal Loans More Popular Now?

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What is Making Unsecured Personal Loans More
Popular Now?
The lending market today is diverse and on its
way to becoming a lucrative business like just a
few other. Along with that, the industry is also
gaining maturity, making it safer by the day.
Yes, there are flaws in every real-world scenario
and the lending market is no exception.
Nonetheless, few would argue that the lending
environment today is at its safest yet. That
said, there is one seemingly less safe variety of
loans that are gaining momentum now, like never
before. While some critics argue that these are
designed to be safe but in just a non-traditional
way, the vast majority do not have this opinion.
This article is about what are known as unsecured
personal loans - loans which can be taken for
unspecified reasons, with no collateral being
jeopardized as a guarantee of repayment. Most
Popular Unsecured Loans - Payday Loans Cash
Advances Unsecured personal loans come in various
forms payday loans, short term installment
loans, emergency loans, some credit card loans
and many other loans which may have similar
concepts as one or more of these, would all would
all belong to this class of loans. Typically, in
the US, non-bank direct lenders offer such loans
because such entities are not authorized to seize
any assets of borrowers in the event of
non-payment of loan dues by a borrower. Amongst
the most popular loan products amongst these all,
is the payday loan or cash advance loan. These
loans are very short-term loans of small amounts,
which can be applied for online or through some
brokers and pawn shop lenders. Online services
are facing a strong surge in demand due to
convenience and easier verifiability of their
services. An example of such a loan providing
service is EzPaydayCash - a renowned direct
lender dealing in online cash advances
only. Risks Involved Any loan taken has its risks
involved for both parties (borrower and lender),
much like perhaps any other business deal also
does. However, unsecured personal loans are
considered by many, as the ones with the highest
risk. A higher risk in lending calls for a higher
return where the demand can permit, and being in
demand, such loans tend to be amongst the most
expensive lending products across the
market. Here we list few of the main risks
involved for both the borrower and the lender,
with specific reference to unsecured personal
loans. Risks for the Borrower 1. Many such
loans overlook credit history, which can mean
loans given out without verifying the borrowers
repayment ability thoroughly 2. Loans seems
more attractive and resistance factor reduces,
which may lead to temptation 3. These loans
are very expensive and non-repayment penalties
are usually higher than other loans 4.
Sometimes the borrower unknowingly deals with an
unregistered, unauthorized lender and could be a
victim of fraud
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Risks for the Lender 1. With no rights to
seize assets, the only way for a lender to
retrieve money for an unpaid loan, is via a court
case 2. Offering such loans with high interest
seems like a lucrative business but recovering
money is not always simple and straightforward 3.
Critics are frequently voicing strongly
against such loans What is Making These Loans
More Popular? The risks mentioned above are
significant and real. Despite these risks and few
other minor risks, unsecured personal loans
continue to see growing demand and supply in many
countries across the globe. Having reflected upon
the main risks, now we reflect upon the main
factors that play a significant role in the
growth of unsecured personal loans. 1. Safety of
the Borrower's Assets For most borrowers in the
modern market, it is virtually impossible to
pledge an asset of value - many borrowers of
loans are either fairly new at their job or just
starting off getting settled and may not have
possess dispensable valuables. To add to that,
the feeling of being secured while transacting
for a loan is also found essential in multiple
surveys. These factors simply indicate that a lot
of borrowers prefer and/or require safety of
their assets, enough to allow them to choose a
more expensive unsecured personal loan over one
with a collateral at stake.
2. False Criticism is Also Publicity Some critics
make valid points and raise valid opinions of
concern related to unsecured loans. However,
there exist many whose arguments either seem
false or are proven false. Nonetheless, there is
undoubtedly a lot of criticism and a whole lot of
false criticism. This does lead to publicity and
as they say, sometimes, no publicity is bad
publicity!
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3. Limit to APR Perhaps one of the best moves
in the recent years by most state governments
with reference to payday loans and some other
unsecured loans, was to cap the APR that can be
charged by any lender for such loans. This
regulation has prevented usury, enabling
borrowers to feel safer. This in turn has
benefited the entire market and helped it
strengthen further. 4. Other Consumer-Friendly
Jurisdictions Time and again, various governing
and regulating entities review, revise and add
regulations and acts aimed to make the lending
market safer for both borrowers and lenders. A
lot of focus off late, has been seen on payday
loans as well as other forms of unsecured
personal loans. Reforms and regulations have
impacted the loans process, reduced advertising
malpractices, cleaned up unauthorized clone
firms, and eliminated aggressive collection
processes and so on. While it cannot be said that
the industry is now all clean and fully safe,
great progress has been made and is continued to
be made with each year that passes by. This again
makes both the borrowers and lenders feel safer,
making it a more viable business in the longer
run. 5. Profitability of the Industry No
industry can flourish and sustain without
profits. Any direct lender looking to enter the
market offering unsecured personal loans is
choosing to take a risk, which is worthwhile only
when there is profitability in it. Operating
figures of most lending companies tend to reveal
a decent profitability despite the heavy risks
involved and despite bad debts too. This not only
allows the lenders to progress and grow but also
attracts more lenders to offer such loans, which
in turn adds to their popularity over time. 6.
Popularity of Payday Loans Cash Advances Most
of the recent growth of unsecured personal loans
can be credited to payday loans and cash advances
offered by direct lenders. While these are the
products that are often the target to the maximum
amount of feedback criticism too, millions of
people each year utilize such loans for a wide
variety of applications due to the ease and
quickness of these loan services that is growing
due to immense competition and demand. Conclusion
Unsecured personal loans like payday loans and
cash advances, despite being higher on risk for
both borrowers and lenders, come with certain
advantages, that can be said to outweigh the
resistance that the risk factors may cause and
this is reflected well in their steady growth of
both demand and supply in the recent years. To
add to this, constant attention from critics and
the government has led to the market becoming
cleaner and safer for the borrowers and the
lenders. Given all these factors, it is easy to
see why unsecured personal loans are gaining
popularity and also it is quite safe to assume
that this trend shall continue for now. A trusted
lender of such loans is EzPaydayCash and their
reputation as a direct lender of guaranteed
payday loans is a reflection of what makes the
most popular form of these loans, most attractive
to
borrowers.