Sms-lån: All About SMS Loans

Publication date: March 2, 2021

 

In the past when you needed a loan you had to go to a bank and fill an application form first. This can at times get cumbersome especially when there are lots of customers. You’ll have to physically wait in line for your turn.

Nowadays, you can do it all on your mobile phone in the comfort of your home. Thanks to technological innovations that have resulted in the digitization of such services. All you have to do is send an SMS to the bank that you are requesting a loan from.

The process is also much faster than the traditional methods and is more convenient. Here is more that you need to know about SMS mobillån loans.

What is it?

As the name suggests it is a form of loaning system that involves the use of SMS. This was true at least when it was invented.

The borrower could request a loan from a bank by sending an SMS. The lender would then review the application and decide whether to grant or decline the request. Nowadays, one doesn’t necessarily have to send an SMS.

You can send the application even through your PC or tablet. There are various online sites that support it. The time taken to process the application is relatively short in comparison to the traditional systems.

With this, you can get your request approved and have the money in your account in a matter of minutes. It doesn’t involve lots of verification and checks as is a characteristic of many lending systems.

 

 

How does it operate?

The basic principle of operation is that the borrower sends a request through SMS that gets reviewed by the lender. Based on the results of the review, it can either be granted or rejected. However, the criteria used during the review can differ from one lender to another.

The process is not as thorough as that done when you physically go to a bank to request a loan. This is good in that it makes the process go faster but it is also risky because there is a high chance of the loan never getting paid back. It is for this reason that the amount awarded is usually small and is to be returned within a short period.

These days the procedure is getting more sophisticated and can take a day or two. This is due to the introduction of stringent measures to try and make it safer while also satisfying the modern-day needs of customers. See this link for more about loans and credit history https://marketbusinessnews.com/sms-loan-without-uc/206103/

How is the interest rate?

The aim of this innovation was to make it more convenient and affordable to the customers than the existing borrowing systems.

Thus the interest rates are usually low or don’t exist at all. It is, however, sometimes seen as a marketing strategy and not a means of satisfying consumers’ needs.

This is so because it includes other fixed fees such as administration fee, application fee, and late payments are also penalized. In total, you still end up paying more than you borrowed even if you pay on time.

This is also a way of ensuring that the lender earns considerable income. Imposing low-interest rates alone won’t attract much income, especially, when customers pay on time. On the other hand, having high fixed fees ensures adequate returns regardless of the period of payment.

SMS loans vs traditional loaning systems

When it was first introduced most people were in favor of the SMS loaning system. The marketing strategies portrayed it as a convenient innovation that has customers’ best interests at heart.

This has, however, changed with people having different views concerning the whole thing. The interest rates, for instance, are very high even though it is advertised as having low or no interest rates. This is due to the fixed charges that apply irrespective of paying on time. Based on this, the traditional systems prove to be better since the rates are flexible.

Such marketing strategies have also resulted in criticism from organizations that are in charge of protecting consumer rights and other authorities thus forcing the firms to alter how they operate. For example, the review process takes much longer now hence making it almost the same as the existing traditional schemes. The same is true for the online application method as it requires you to fill a form.