Bank Hassles and Paperwork Make Online Personal Loans Appealing

[Mar 25, 2010.]

 

Critics who go crazy over the fact that personal loans, especially bad credit unsecured personal loans, may carry high annualized interest rates are often missing the point of why consumers choose these types of personal loans to begin with, and that reason belongs in capital letters because it's so obvious:

CONVENIENCE.

The tremendous hassle and paperwork required for the typical bank loan is enough to drive a man crazy. Many people don't enjoy that kind of stuff and want no part of it.

Convenience and lack of hassle are why online personal loans appeal to people, even if the interest rates on these loans can be high compared to traditional good credit bank products.

More Regulation = More Paperwork = More Hassle

A good example of why people may eschew even dealing with traditional bank lending would be mortgage paperwork. Anyone who has experienced the reams upon reams of dead trees needed to get a home loan can appreciate the ease and simplicity of a fast online personal loan.

Delving further into why exactly a mortgage requires such incredible amounts of incomprehensible paperwork is a lesson in and of itself. The RESPA law mandates an extreme level of disclosure from the real estate agent to the homeowner/borrower. This is not a bad thing, in fact disclosure is a good thing.

However, did RESPA do anything to prevent the subprime mortgage disaster, and now there are millions of people who claim that they never understood a thing of what was being disclosed to them?

Not really. In the case of mortgages, more paperwork was just more paperwork that most people didn't even attempt to read, let alone understand.

Bad Credit Personal Loans Simple Enough for a Child to Understand

On the other end of the lending spectrum is the online bad credit personal loan. These applications take a matter of minutes to fill out and borrowers can qualify for loans within 24 hours or, in certain cases, less.

The common repayment methods for these loans is similarly simple--the borrower writes a post-dated check or otherwise agrees to have the repayment of their loan direct debited from their bank account on a certain day. The lender needs a phone number, address, and usually an employer address.

And that's pretty much it. Application submitted, application either approved or denied.

The popularity of 7-11 stores testifies to the fact that people are willing to pay for convenience. The popularity of bad credit personal loans tells that same story.

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.