Some advocates for low-income U.S. residents try to have stricter regulations placed on lenders providing money to people with problem credit. They may even advocate for municipalities and states to prohibit these companies from doing business in the region. Sometimes they succeed. Unfortunately, this doesn’t address the underlying problem, which is a huge demand for these opportunities. People typically seek installment loans from companies like Maxlend Loans because they are in a temporary financial crisis and have no other way of getting the money.
Three Sides to the Issue
There are different sides to this issue. The advocates mean well but don’t offer suitable alternatives. The lending companies charge relatively high interest, but they do so because they provide loans to higher-risk borrowers. The default rate is significantly higher among that population group. The people who need to borrow money may have nowhere else to turn when an emergency develops.
Research has shown that when people don’t have these options, they tend to write overdraft checks. This results in bank fines of about $35, and if the bank doesn’t cover the overdraft, the company that received the bad check will probably charge its own fee of $35. Those fees can add up quickly and dramatically, causing serious financial problems for the person who was already in crisis.
A handful of media outlets and influential Internet companies won’t accept advertising from these lending institutions, as though that will somehow help people in a financial emergency. They continue to show ads from a multitude of other lending businesses that will not provide money to people with low credit scores.
Although installment lending businesses charge higher interest than banks, credit unions and credit card companies, the large numbers of customers they serve confirm the strong demand for these options. Many men and women are uncomfortable trying to borrow money from family and friends, not wanting these people to know they are having this level of financial difficulty. They may not have a car to borrow against with a title loan, or they may be afraid of repossession. Online installment loans provide a method for averting disaster.