Recently, we have seen that several lenders have changed their fast loans. Lendscan and the Loan Stared, for example, removed their shortest term of 1 month, which means that you can only put up your loan for 61 days or three months with them. In addition, Lendscan recently began offering online credit in addition to its sms loans, just as Letlend Credit does. Since then, VIA SMS Group (which is behind the sms mortgage company ViaKredit) has also launched a new brand under the name Viakredit which only offers online credit, one that has become more common since last fall.
Are credit companies preparing for the fall?
There are, of course, several reasons why credit companies have started to change their products. One reason is that online credits can provide better returns than sms loans. This is because they can be paid off for a very long time and the borrower can use the credit again. However, for you as a borrower, it is a cheap alternative to sms loans if you repay what you have borrowed within a short period of time, but if you pay off the repayment period it will be very expensive instead.
Another reason may be that fast-mortgage companies are well aware that the industry will probably be regulated a little further in the future. Yes, there is a government inquiry into this. If the investigation introduces a relatively low interest rate ceiling, it will not be possible to lend type USD 1000 for 30 days and make a sufficiently good profit on it, but with longer maturities and slightly higher amounts, it works. Then you can lend USD 3000 or 5000 and upwards at a lower interest rate, just as some lenders already do, such as Money2You and LetMoney. And in this situation, it will certainly work well to offer online credits as well, although interest rates may need to be lowered further.
SMS loans are adjusted according to Google’s guidelines
There is also a third reason (probably the biggest reason) why credit card companies are starting to change their maturities are Google’s new guidelines for sms. Because it is no longer allowed to advertise loans that have a shorter term than 61 days at Google.
We at Snapmoney Finance believe that this is only positive because we would like to see the maturities become longer so that people can pay back their sms on time. Now only interest rates need to be lowered to a decent level.
Goodlink Finance’s new flexible loan – bad or good?
Goodlink Finances has also changed his product. Instead of offering sms loans with a maximum maturity of 30 days (with the possibility of extension), they have made their loan more flexible. Now you can pay off the loan for a significantly longer time, only you pay at least 3% of the loan each month. It is both good and bad:
- The good thing is that you do not need to apply for an extension after 1 month if you know from the beginning that you will not repay it after such a short time.
- What is bad is the ridiculously low repayment requirement of 3%, because if you pay off on a fast loan at such a slow rate it will be horribly expensive. Goodlink Finances himself shows on his website that if you borrow USD 5,000 and repay the loan for as long as possible, the total amount will be USD 32,992! It’s absurd. But sure, if you pay back USD 5000 within a month, it will cost you no more than USD 0 if you are a new customer, and only USD 750 if you pay after 2 months. It’s not so bad after all.
Now it remains to be seen if Goodlink Finances will also offer a minimum maturity of 61 days in the near future. And if a cost ceiling is guaranteed, they will be able to change their low amortization requirement.