Emergencies and other important events don’t always arrive at the easiest time — especially when it comes to people’s finances. When an unplanned expense, like a funeral or needed surgical procedure, suddenly comes up, their savings may simply not be enough to cover it.
Traditionally, credit cards have been the way consumers shouldered the up-front cost of a large, unexpected expense. However, financing at the point-of-need has grown significantly in recent years as a smart alternative to credit. What’s behind their sudden popularity? Here are just a few reasons consumers are changing their financing habits.
Improved Lending Technology
Applying for a loan used to involve waiting periods of up to a few weeks before an applicant knew whether or not they were approved. The ability to apply and check their rate online has drastically sped up this process; for example, our loan application now takes seven minutes or less, and can provide a loan decision within seconds of completion. Once loan documents are signed, funds are deposited within a few days. This makes loans a much more appealing payment alternative, as many expenses can be extremely time-sensitive.
Fixed Repayment Terms
The minimum payment on a credit card can fluctuate, making budgeting harder for the average consumer. By comparison, many personal loans have a fixed rate and term with a definite payoff date, which helps with budgeting and provides a clear timeframe for when the consumer will be debt-free. Some personal loan programs even include promotional financing plans that bring the opportunity for greater savings, including LendingUSA, which offers 0% interest on all loans fully repaid within six months.
Lower Risk to Credit Score
When a consumer applies for a new credit card, they undergo a “hard” pull on their credit history, which can bring down their overall credit score – even if they’re approved! LendingUSA’s application, on the other hand, performs a “soft” credit pull until the customer is ready to sign their loan documents, which has a much lower chance of hurting their credit score. This gives the customer the freedom to apply and check their rate on a loan without putting their credit at risk.
Better Terms for Merchants
It’s common practice for credit cards to charge business owners a standard fee on every single transaction. This fee varies wildly depending on the type of service provided, ticket size, business size, and other factors. While credit cards can be convenient for many consumers, these fees can seriously add up for the merchant, costing them thousands per year.
In response, many businesses are adopting financing solutions at their point-of-need as a convenient, cost-saving alternative. LendingUSA has no enrollment, monthly, or minimum fees, and has the potential to save hundreds on each transaction. Schedule a free demo today to learn more.
