UK has just got a new smart way of taking out a loan: by sending SMS text. Several UK companies are introducing this innovative service in which the users are required to just send out an SMS and the loan is in the bank account within minutes. Text Loans are the latest 'in thing' riding on the back of the payday loans industry which is already seeing an explosion in the country.
Text Loans: Current Status
Several European countries like Finland, Holland etc. are already seeing an influx of companies lending via SMS text. The service being popularized as SMS loans or Text Loans are the cousins of 'payday loans' where in users are even spared the trouble of logging in to the website. In UK too several companies have started working in this direction.
- Txt loan
- Instant txt loans
- 24-7 Money Box
- Cash Genie
We do believe that several other companies, particularly from the payday loans sector are going to launch in this arena too.
How Text Loans work
So how do text loans work? This may depend from company to company, but I will highlight the typical process as used by txt loans and some of the other European companies.
Step1: You register on their website by filling up your mobile number and other details.
Step 2: They verify your details and credit history from online sources and also charge you a small registration fee £1, as in the case of txt loans.
Step3: After the verification, they determine if you are an eligible customer or not. If yes, you are assigned a unique PIN to be used in text messages.
Step4: Every time you need a loan, you send out an SMS from your registered mobile phone in a special format along with the loan amount you need. The loan is credited to your bank account in minutes.
Interest Rates
Ohh wow.. it all sounds so cool and easy.. whats the catch? Here it is. The interest rates. Txt Loan charges a whopping 10% for a seven day period. And if you default, its 25% on the 8th day and rises to a 100% by day 30. Considering these rates of interests, these loans are not some luxurious service provided to customers as they are advertised to be. We only hope that people use these loans with caution and do not land themselves up in some spiraling cycle of debt.
