You’ve gone for weekly grocery shopping, and once you’ve filled up the cart, you realize you might not have enough money. That’s a bummer, but there’s a way out. You have two options – to put some necessities back on the shelf and thus fit into the existing budget or borrow money. 

The second option is a way to get the cash you need quickly. However, traditional loans can’t make money available to you instantly. It takes some time to apply, check your application, and transfer funds to your account, provided you’re approved for the loan.

On this page, see why lenders check your credit before approving your application:

At best, it can happen in an hour or two. And what if you still don’t get the loan? Fortunately, there is an alternative solution in the form of SMS loans available in many developed and developing countries.

What Are SMS Loans?

Text loans are a popular method for solving sudden expenses and covering day-to-day costs before your paycheck arrives. They are an alternative to payday allowance, meaning you can get them under the same lending conditions (short repayment term and high-interest rates). 

But the difference is how the application is made – in this case, it’s via SMS. All you have to do is to send the text to a lender, asking for a certain amount. In return, you’ll get detailed instructions on how to proceed with the application. You’ll get instructions on debt repayment, and once you pay it back, you’re all set.

How These Allowances Work

First, you have to find lenders who offer text loans and check their financial products. Make sure you’re clear with all the loan costs and lending requirements. Then, you send a text message containing your personal identification number and the amount you want to borrow. There’s usually a predefined text template you can use.

Lenders need it to do a brief check of your credit and ability to repay the debt. If it’s all good, they send money into a pre-arranged bank account, giving a PIN to borrowers once their particulars are confirmed. That can happen almost instantly if there’s no need for extra checks.

Who Can Apply for SMS Loans?

Everyone with steady employment and regular income can apply for SMS loan and get approved. These are available even for those who have no credit history yet. The lender will check your financial situation based on the brief information you provided, so they decide on the approval in a matter of minutes. In general, anyone who can afford to pay regular installments will be approved.

Some lenders won’t run a credit check, which is handy if your credit history isn’t great. That’s how these loans allow you to fix your finances even if your credit score is below average, but they come at a very steep price. 

The APR for bad credit borrowers can be high, making these loans unfavorable and definitely not the permanent solution to your financial trouble. See this link to see how the APR is calculated.

Good Reasons to Apply for SMS Loans

You can access credit fast and cover unexpected and emergency costs, just like payday loans. Most lenders provide fast funding, and some are even available on weekends. For example, you can apply while at the store, waiting in the cashier’s line to pay for your grocery shopping.

As for repayment, lenders are usually flexible with lending terms. Depending on the amount you take, you can repay the debt with your next paycheck or through several pay cycles. These payments go automatically, so the risk of forgetting and falling behind is minimal. Plus, you don’t need collateral for this type of short-term financing.

Simply, you text the lender when you need the money. If you meet the conditions for approval, the cash will be in your account soon. This procedure makes credit accessible and quickly available since SMS communication has proven to be quite efficient.

These micro-allowances also have less strict eligibility criteria. It makes them handy for people with a below-average credit score and short or no credit history. They might be able to borrow less than people with good credit scores and pay more interest, but when their options are limited, this small loan is better than nothing.

When Taking Out SMS Loans Is Not a Good Idea

Despite all the benefits, these arrangements come with substantial risks. As these are costly arrangements, don’t get used to them. Eventually, these loans can wreak havoc on your finances, especially if they are already troublesome. You can fall into the trap of borrowing more than you need at a time when you can’t afford it. 

The trouble occurs when credit becomes available to those who don’t have good spending habits. They will rush to get these short-term loans and use them as a quick fix. And they’ll do that all over again, thus falling into a trap of late or missed payments. And unlike traditional personal loans, not repaying SMS loans carry more severe consequences.

Another problem with these quick loans is high-interest rates. These aren’t a stumbling rock for responsible borrowers and those who budget their payments carefully. But if you can’t manage your debt, you can stumble upon an interest that’ll start to compound, plus all those late fees and penalties. 

Are There Any Alternatives?

Texting your lender and getting SMS lån Norge within minutes is a quick way to solve current problems. But due to all mentioned cons, this option might not work if you’re in long-term debt. To avoid even worse financial struggles, you should try alternative ways of borrowing money.

For starters, you can always ask your friends or relatives to jump in. If you have someone to borrow money from, that would be great, as you don’t have to pay interest or worry about late or missed payments. Of course, it’s always best to pay your debts on time. But if you don’t want to risk your personal relations because of money, you still have a choice.

Personal Loans

Personal loans are harder to get but more affordable than text loans. Plus, you can borrow more. Of course, you’ll pay fees and interest included in this type of financing, but you can borrow more than you need and pay that back over a longer period.

Personal loans have strict eligibility and lending criteria. They need you to have a good credit score and enough income to repay debt regularly. But the interest rates are lower than on text loans. Borrowing money this way and repaying it on time is an excellent way to build and improve your credit score. And the lenders are willing to offer flexible terms if they find you a trustworthy borrower.

Credit Card

Credit cards are another type of short-term borrowing. This method of financing comes with a limit that depends on your income and current debt. Also, the length of your credit history will be a deciding factor in the limit you can get. The shorter it is, the smaller your limit will be. 

But if you get a credit card even with a small limit, that’s great. Over time, you have to prove yourself as a responsible borrower. That means you must use your card wisely (keep your credit card utilization rate low) and pay off your balance on time. That will be a good starting point to build your credit and, eventually, get a higher limit.

SMS loans are a great way to get access to cash when you need it fast. If you use it wisely and only from time to time, you won’t burden your finances. But if you turn to this allowance every once in a while, that might get you in trouble.