A new idea is taking the world by storm – using your valuables as security for short-term loans! The people behind the idea are called unbolted.com and they are creating a new way for people to get their hands on cash quickly and efficiently. You simply use your assets as security for a cash loan. So, if you have a designer handbag, or even a car, you can use these items in innovative ways to raise cash in the event that you require funds quickly.
Some people turn to short-term credit providers like Wonga in financial emergencies, however the emergence of this new idea adds a new option for people who want to get their hands on short-term credit. Its emergence raises the question, though as to whether the same regulation that currently applies to lending giants like Wonga will be tweaked and also applied to new innovators like Unbolted?
Unbolted.com is a new lending concept, modeled on the short-term loan and payday lender Wonga. You can borrow between 500 pounds to 300k for a short period of time, provided you have some kind of valuable asset that you can use as security for the loan. So, gone are the days when you had to have a house or a job to get short-term credit, because now you can turn your assets into security for loans of up to 300k!
Regulations of Short-term Credit Providers
The emergence of this new approach to short-term credit has been very recent and as such it is vulnerable to being hit by regulations, as was the case in relation to payday loan providers. This raises the question of the value of a heavily regulated short-term credit industry and what the true value of these rules are? Some people suggest that the regulations are there to protect people from financial calamity or spirals of debt, but others are suggesting that clamping down on short-term credit providers actually harms the people who need cash the most – the poorest people in the UK, who can see payday loans as an effective way to combat a financial emergency like when the car breaks down, or if the heat breaks. The most worrying question is the question of who these people are likely to turn to in the absence of short-term credit providers? Many suggest that the place where these people will turn to is a black market of credit so loan sharks or even other activities like prostitution, petty theft or selling drugs.
An Expensive Form of Credit?
The emergence of unbolted.com has attracted its share of critics. The heaviest criticism is the one that suggests that this is an expensive form of credit that should be avoided. There are also hidden consequences associated with this type of borrowing for example if someone defaults – how does the creditor enforce the action against the security that has been provided? These are all questions that remain to be answered as short-term credit providers struggle to stay afloat in a tough and ever tightening regulatory and economic climate for short-term credit providers.
What do you think?
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