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Even when the year feels like it’s been going very slowly, the holidays still seem to come around suddenly. As you prepare for holiday gift season, you may need to consider financing to help you easily shop. Before you know it, it’s time to start shopping for gifts, but your bank account may not be ready for you to start. What can you do to deal with this problem?
Fortunately, there are options out there for people who don’t have the cash or the credit to cover their Christmas list. If that sounds like you, alternative credit may be just the solution you need to make your holiday merry and bright.
What Is Alternative Credit?
Before going any further, you will probably ask that question. Because it is a rapidly-changing system, it can be difficult to describe what alternative credit actually is. An easier option is to describe what it is not.
If you’ve gone to a local bank in hopes of borrowing money for a purchase or establishing a credit card, that’s not what we’re talking about. If you’ve opened one of those pre-approved offers in your mailbox from a national bank and applied for an account with them, that’s not it either. Standard home loans refinancing options don’t fall into this category either.
Simply put, it’s a credit system that operates outside the traditional banks–the ones you see on street corners and along your downtown streets. The system is still effective and reliable, it’s just built differently because it serves people in different situations.
The end of the one-size-fits-all approach to banking is what the alternative system is all about. Traditional banks are all pretty much the same, and they only want customers who are all pretty much the same. That cuts many borrowers out of the picture, even though their needs are just as important as anyone else’s.
Where Did Alternative Credit Come From?
Any type of business transaction is built on two simple things: The demand for a good or service and supply of that good or service. In other words, it’s what results when people want to buy something from people who have it to sell.
The alternative system developed for consumers who just couldn’t get what they need from the traditional banking system. There were lenders who wanted to make it possible for more people to get credit, and the alternative system developed to bring those two groups together.
Thanks to recent situations like the subprime mortgage crisis of 2008, most financial regulations among traditional banks have been greatly restricted. That has opened the door for a new market that doesn’t work the same way.
In the alternative system, it’s all about helping people find solutions. Whether it’s financing to start a small business, money for the holidays, or anything in between, there is probably an alternative lender out there who can meet that need. They lend to people who are in circumstances just like yours–they all have a financial need and no way to use the traditional system to address it.
How Is Alternative Lending Better?
It seems like everything we want from traditional banks and credit union businesses is exactly what we can’t get. Banks always seem slow to provide the funds we need. Alternative lending provides a much faster turnaround, getting you your money when you need it.
Of course, that slow money only comes to you if you get approved. Traditional banks are much stricter on credit requirements, making it tough to get started or restarted on building good credit. The alternative system makes it easier to get your loan.
The process of getting an application put together is also tougher in traditional banks. There are pages and pages of forms, often asking for information you may not have at the moment. The alternative system sets aside lots of paperwork and makes the application simpler.
The other big difference is flexibility. Commercial banks have stricter rules on securing loans, whereas the alternative system allows you to use the power of your existing assets to get the money you need. The presence of collateral makes the risk lower for your lender, so they are willing to offer you a better interest rate.
What If You’re Not a Banker?
A common problem with traditional banks is that their applications are too long, as we’ve already mentioned. Another problem is that lenders typically don’t help you through the process.
The alternative system does things differently. Their goal is to get the loans into the hands of the people who need it, and the only way to do that is to provide support and advice along the way. They’ll answer your questions, direct you toward the information you need, and otherwise work to help you get the application completed.
Of course, the help doesn’t end there. As you’re paying on your loan, they’ll still be with you. Many alternative systems have a variety of payment options, not just in terms of how often you pay but also the way you pay.
All in all, your alternative lender will prove much easier to work with than the traditional banks, all of which are making plenty of money from their traditional customers and aren’t as concerned with your needs.
In fact, that’s much of the reason why the alternative loan system developed. Under the old way of doing things, the same kind of people could always get loans and the same kind was always turned down. It leaves lots of people unable to get credit for even the most basic needs.
The calendar waits for no one, and neither should you. When summer comes to a close and you start to see December on the horizon, you’ve got time to make a plan to do your holiday shopping. That’s regardless of whether you’ve got the cash on hand or enough plastic to make the purchases.
The alternative credit system is just what the doctor ordered for consumers who lack the traditional resources for lending or purchasing. This way, you can ensure you always have sufficient financial liquidity to purchase holiday gifts. With a simpler process and faster results, it offers a better option for people like you.
