In the modern economy, traditional financing isn’t always an option for everybody. Due to the current economic climate, thousands of people are looking for alternative lending methods. Here are some options to secure financing when traditional means aren’t an option.
Using a Car Title as Collateral
Recently the trend of lenders offering to secure loans based on cars has been on the rise. These loans are available for consumers in possession of newer automobiles and their titles. The lender can use this title to apply for loans up to 75% of the approximate value of the vehicle. For consumers with low credit or who cannot verify income, these low sum loans are becoming increasingly popular.
Though controversial, there is no denying the popularity of payday loans in recent years. With retail locations through the U.S. payday loans are a highly popular lending service. For consumers that understand the risks associated with short-term, high-interest borrowing these loans can be an alluring financial product due to their ease of access. Due to increased regulations the future of these loan types is uncertain.
Pawnshops operate in one of two ways and are considered one of the more simple ways to borrow money. The first is for the consumer to sell an item directly to the pawnbroker, this is a straightforward transaction in which the broker offers a fixed price and the consumer leaves with cash, there is no requirement to pay back this amount. The second (and more popular) method that pawnshops offer is providing loans which the borrower’s item is held as collateral. Here the pawnbroker loans money and holds on to the item in case the borrower does not repay the amount. The amount, dates, and interest rate are all agreed upon before the item is exchanged for cash and a pawn ticket. When the borrower returns the agreed upon sum and ticket, they will receive their item back.
“P2P Lending” or “Peer-to-Peer Lending” is a relatively new way to secure financing when traditional means aren’t an option by leveraging new technology. By using online services (which collect a one-time fee) potential borrowers are matched with potential lenders. The interest rates and amounts can vary widely in these types of loans. The requirements for these loans can also vary depending on the website, lender, and amount. P2P lending was originally seen as a way to put lenders and investors in direct contact therefore bypassing the middleman. The ease in which these loans are available depends on the specific situation of the borrower.
In today’s economy there are more borrowers looking to secure financing when traditional means aren’t an option. The market has responded and there are also more options than ever before to provide nontraditional loans. As always, it is up to the savvy consumer or investor to decide which products are best for their specific situation. The more one knows about how to secure financing when traditional means aren’t an option, the better they will be at navigating this sometimes overwhelming topic.