With the world financial crisis
still looming over everyone's heads, people are now thinking long and hard
about availing of loans and cash advances from financial institutions. With
people losing their homes, cars and other properties due to non payment, they
are now very skeptical about loans no matter how fast, easy and tempting it may
be.
Financial institutions such as banks
are now making it so much easier for people to avail of cash advances, some to
the extent of not going through background checks just so they could entice
people to apply for a loan. For as long as anyone can remember background and
credit checks are a must before approving a person's application for a loan
because the results of the checks is the basis of whether a person can pay the
loan or not. Should there be difficulties up ahead and the borrower can no
longer pay the loan amount, the company can always get back that person's
property as payment for their loans. This is what is happening now not just in
the United States but all over the world. Is doing away with background checks
a good move or will it wreak more havoc in the long run?
People have to understand that
despite the fact that people are now having a hard time paying their debts, a
lot of people would still want to avail of additional cash especially if it's
very easy to get hold of. Most of the people who go ahead and apply for these
are those who are up to their necks in debts and are being hounded by the
companies they owe money to. The quick fix for most of these people is getting
more loans to pay back the old ones. What they do not realize is that it will
bite them back in the long run. For example, a middle-aged, unemployed married
man has to pay his card debts. He is told that if he cannot pay the minimum in
such a time he will be charged with more interest until it would be impossible
for him to pay off his credit card debt. If he avails of the quick-fix loan and
pays off his credit card debt, he is now bound to pay the company who lent him
the money to pay off his debts plus interest. Since he is unemployed, how can
he now pay for his new debt which is higher compared to his old debt?
No matter how one looks at it
getting money quick and easy with no guarantee of being paid back is risky.
Credit checks should be done at all times to avoid more losses and bankruptcy.
What the companies can probably do is shorten the waiting period to avail of
the loan or lessen the red tape but credit checks should never be taken out of the
equation if they want their business to continue and prosper.
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