If I asked you to tell me about some of the most recent technological advancements that have been made in the field of lending and borrowing money, you may be stumped.  After all, has a lot really changed in the past few centuries?  On the surface, the answer does appear to be “no,” at least for the most part.

What may come as a surprise, though, is that behind the scenes there have been a lot of advances!  The ways that we communicate with lenders and financial institutions, for example, has become much improved.  In fact, this is the core of my article today!

Now, if you are still a bit confused, I do not blame you.  In fact, I think that a lot of us probably miss the days of not getting constant phone calls or texts from scammers pretending to be our banks or lenders – getting rid of junk mail and sorting it from the real notices was much easier.  However, there is still plenty to be said about what has gotten better.

Did you know that there are now ways to apply for and be approved for loans entirely via SMS messages?  “SMS” means “short message service,” for those that do not like to work with acronyms (myself included).  Until I started to look into borrowing money from private lenders, I honestly had no idea either.

That is why I have decided to write this blog today.  The convenience factor alone makes it worth taking into consideration, at least in my opinion.  So, let us go ahead and get a deep dive on what these loans are and how they work in practice.

The Basics: What are They

As it says on the tin, they are a sum of money that is lent out by a financial institution or private group which is expected to be paid back in full (plus some interest).  However, instead of doing a lot of painful paperwork, the transaction is done via text messages instead.  This appeals to younger audiences more often that not, but that does not mean they are exclusive to that age group.

Typically, they do not involve an overly rigorous credit check, which is another part of why they younger age groups gravitate towards them a bit more often.  If we are considering a “equivalent,” it is probably payday loans.  This might raise a few red flags but let me explain.

Depending on what part of the world that you live in, you have probably heard a lot about payday loans and how risky they are.  There are valid points to that argument, of course.  Because they have such high interest rates, they can sometimes end up burying you in debt before you even realize it.

However, these text message loans are a bit different in how they operate and are generally considered less predatory.  You can see examples of a smålån i Norge all over the internet, so it might be worth taking a peek if you are still uncertain.  Essentially, if we examine what the goals are, it is to increase accessibility to credit.

No matter how much some of us dislike the system that is currently in place, it is difficult to deny that credit plays a large role in both the world and our own individual lives.  Beyond the obvious, it might seem a bit strange, but to buy a house, a car, or even to rent an apartment, our credit scores need to be at least somewhat good.  Otherwise, we can be considered too much of a risk for lenders.

How it Works

Trying to borrow money in most instances can be a real hassle.  There is a lot that goes into an application, though we may not see that from the way it is presented on websites sometimes.  Sure, they can offer you “pre-approvals” and “no paperwork” options, but often these are thinly veiled marketing schemes to get you to click on their page.

So, it is never a bad idea to be cautious when we are searching for a financial institution to work with.  How can we find a text message loan that is “authentic” to the name, though?  It is fairly simple – just make sure to follow along closely.

The first step involved is sending a text message to the credit broker that you are interested in borrowing from.  It should contain a personal identifying number.  When that happens, the lender will end up depositing the funds into whatever bank account that you wish it to be disbursed to.  Notably, this is often arranged well beforehand, so just bear that in mind as you go through the process.

After that, what happens, though?  Well, your job is not quite over yet.  Typically, the lender then messages you a pin.  This is to confirm your identity and ensure that all of your details are accurate on their end.  While some may end up doing a credit check on you, there are plenty who do not.

In terms of how much that you can borrow this way, there are generally some pretty strict limits on this.  After all, with how easily people can get approved, there has to be some sort of limit.  Most borrowers end up getting loans between one hundred dollars and one thousand dollars, in United States currency.  It could vary depending on what currency you are working in, though.

Why do People Get them?

No matter which type of loan that you decide to get, there is an inherent risk to taking them out.  We should never be trying to spend money that we absolutely do not have.  Of course, SMS types make it a bit easier to do that, which is why some experts recommend caution when taking them out.

This might make you wonder why anyone goes this route, then.  Obviously, the answer to this is not simple.  Rather, there are a couple of varying motivations and factors at play that could influence a person’s decision in this direction.  One of the biggest ones is a need for money and quickly.

Sometimes, life throws some big curveballs our way.  Unfortunately, more often than not, these come with some serious costs.  It is not always possible for us to be prepared ahead of time to have money prepared to deal with it.  That is when SMS loans can come in handy.

Another reason could be having a low credit score or hardly any credit history.  This can put a real wrench in plans to take out traditional loans.  For some, this might be the only option that they have in a time of need.

Others still just prefer the convenience and speed of the whole thing.  Thinking about all of the people in my life, there is not a single one that comes to mind who actually enjoys dealing with paperwork and bankers or lenders in face to face or phone conversations.  They can be tiresome affairs and take a very long time in some cases.

By utilizing this method, though, some are able to skip all of that headache.  While it may not work out for you or be what you are looking for, it might still be worth checking into!