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Updated on 2022.04.30
In recent years, quite a few people have chosen to build wealth through financial investments, but the stock market has been volatile with sudden rise and fall because of the unpredictable global economic situation. In this stock market era, you may have emergency cash flow needs when the unexpected happens.
Mr. Lee is a part-time delivery man who has suffered consecutive losses in a prolonged bear market recently. This made him even incapable of affording basic living expenses. Hesitating to borrow from family members, he turned to financial institutions for help, and even tried to apply for mobile loans from tier-2 and tier-3 financial institutions. In this article, he will share his personal experience with us.
According to Mr. Lee, he was looking for urgent cash flow nervously and thought that he would be ineligible to get an instant loan approval from banks or tier-1 financial institutions. Coincidently, he saw an online advertisement of a mobile loan from a small financial institution featuring an instant approval without any credit report and showing up. ID card and mobile number are the only things needed during application. Instant approval and disbursement are offered without any agreement signing. Mr. Lee said that this tier-3 financial institution is very loose on borrower's background check and doesn't require applicants to submit documentary proofs. As a causal and part-time worker who gets paid in cash most of the time, Mr. Lee felt very relieved with this arrangement.
Before continuing with Mr. Lee's sharing, let's take a look of why there are tier-1, tier-2 and tier-3 financial institutions. What are the differences? What are some of the drawbacks and risks among them?
Tier-1 financial institutions: Licensed money lenders. Most of them are connected with banks, listed companies or multinational financial corporations and offer various loan schemes. Their loan amounts are relatively higher with a longer repayment period. Special offers are launched from time to time.
Tier-2 financial institutions: Licensed money lenders who may charge higher interest and handling fee. Some of them offer no-credit-check loans for applicants who have lower credit score.
Tier-3 financial institutions: Unknown and even unlicensed money lenders. In comparison, they charge the highest interest rate with a short repayment period. Most of them do not bother to check information like applicant's background and credit report. Documentary proofs and agreement signing are not required. Borrowers only need ID card and mobile number to get an instant loan approval, so it is referred as a mobile loan.
For those who have immediate cash flow needs, tier-3 financial institutions should be the most attractive and convenient option because their mobile loans can be approved without background check, agreement signing, document submission and showing up in person. But somehow applicants easily neglect the risks and dangers behind these mobile loans.
Mr. Lee said that he called in to apply for the mobile loan right after seeing the advertisement. He provided his personal information over the phone and got an instant approval without even showing up, which was indeed too casual from his perspective. Although the loan fund was disbursed to Mr. Lee on the same day, no staffs approached him to explain the loan terms and sign an agreement with him throughout the process. Mr. Lee said that his $5,000 loan application was fully approved, however the fund disbursed to his account was only $3,500, which didn't match the alleged loan amount. It was found out that the difference was used to pay for new customer commission and handling fee.
Besides additional commission and handling fee, Mr. Lee also discovered that his family members were disturbed by frequent promotional calls. At first he did not pay attention to this, but it was discovered later that the tier-3 financial institution was calling his family members repeatedly seeking to confirm his identity. It made Mr. Lee feel worried about his family.
Also, that financial institution was charging an interest rate that is unreasonably high. Mr. Lee indicated that after applying for the instant mobile loan from the tier-3 financial institution, he got approved for a loan amount of $5,000 but only received $3,500. In addition, he had to make repayment every week and was charged a very high interest of $500, and every repayment period was as short as 7-10 days. After the first interest payment, Mr. Lee wanted to pay off the loan as soon as possible because the interest rate was ridiculously high and unbearable. But on his pay day, he found that the principal with interest has already shot up to $7,000, which was extremely unreasonable.
Mr. Lee also pointed out that one of his friends had also applied for a mobile loan from another tier-3 financial institution. His friend passed the ID card information over the phone and get the mobile loan approved and received the loan instantly without showing up.
However, the initial loan amount of $10,000 was turned into a debt of over $40,000 through compound interest in just 2-3 months, and there were lots of unknown calls which made him very anxious. Eventually, his friend was forced to pay off the loan with his family's help, otherwise, the ever accumulating interest would keep him in debt for a very long time.
This experience caused Mr. Lee to find another financial institution to help him pay off all the mobile loans and cut off from that tier-3 financial institution. He had inquired several financial institutions but all of them required him to submit income proof during application.
Mr. Lee coincidently got in touch with Promise loan products on the internet, and he discovered that applying loans from a tier-1 financial institution was not that difficult and it does not require an income proof, which means even those who get paid in cash like Mr. Lee can finish the application easily. There are no trickery hidden terms, excessive handling fee nor commission in Promise loan products, all fees are listed clearly. Promise has designated staffs to explain and follow up its loan agreements with the applicants, and the company's reputation and service quality can reassure all borrowers. As Promise has conducted business in Hong Kong for over 30 years with good reputation, Mr. Lee feels that it is more trustworthy than other unknown mobile loan companies.
Mr. Lee thought that Promise's loan application and approval would take longer time, and he would not get instant approval and disbursement like mobile loans. He never expected that he was able to finish most of the application procedures, sign the agreement on the internet, and got a preliminary approval in a short time. Like mobile loans, he only needed mobile number and ID card to finish the application, and no showing up was required, but the approval process was more systematic and secure. Mr. Lee realized that getting a loan through a phone call is such an imprudent step. Such convenience made him ignore the possible consequences of unreasonable commission and fee, and annoying phone calls.
With Promise low-interest personal loan scheme, Mr. Lee can enjoy the flexibility of choosing a repayment period up to 84 months. Meeting weekly repayment deadline is no longer the case, and Mr. Lee can manage his financial status in a more relaxed and effective way.
At last, Mr. Lee's loan application from Promise was successful. After paying off all the outstanding mobile loans, he decided to start a new journey by following the monthly repayment schedule, checking his investment risks and managing his income and expenditure in a better way. Soon, Mr. Lee was out of debt, and even had money for saving. His financial status was gradually improving and moving towards a brighter future.
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