On Borrowing Money: Credit Mechanisms

Credit history refers to an individual’s record of debts. Debts can either be private or over-the-counter. Private debts are borrowed amounts from personal linkages. Commonly, these debts are borrowed from immediate family and friends. On the other hand, over-the-counter debts are borrowed amounts from legitimate lending groups and companies. Over-the-counter debts are acquired from bank loans, credit cards, and payday loans.

Private debts do not require documents of agreements. Lending conditions are settled between a borrower and lender by word of mouth. There are less stringent conditions for private debts. Because of personal linkage, a lender recognizes the capacity of a borrower during payment. When a borrower cannot pay the total amount on an agreed date, the lender can give payment extensions at no cost.



Conversely, over-the-counter payments require written documents of lending conditions. These documents indicate borrowed premium amount, interest rate, payment due date, and other lending provisions. These serve as a concession proof between a lender and a borrower.

Contracts and written agreements benefit both lenders and borrowers. Basically, over-the-counter lenders are companies and institutions that serve several clients. Written agreements assist in tracking down clientele credit history. Moreover, it enables them to create lending inventories for monitoring of business performance and growth. Fast cash advance companies facilitate short-term lending and supervise client payment through lending contracts.

Likewise, black-and-white documents inform clients and borrowers of lending conditions. In US usury laws, Fast cash advance companies are obliged to disclose all provisions for payday loans. Most importantly, they must inform borrowers of their interest rates. For instance, payday loan lenders in New York are compelled to notify clients of 25% ceiling interest rate. This must be shown on the lending contract. In addition, contracts create a binding agreement between lenders and borrowers. Hence, both parties are expected to abide by contract conditions and provisions.



Fast cash advance lending, also known as payday loan and quick-cash, is one of the most preferred over-the-counter credit mechanisms by consumers. Payday loan companies provide short-term lending provisions that only last for two weeks. This enables consumers to settle financial obligation in a shorter period of time. Moreover, this keeps over-the-counter debts at low levels. Payday loan lenders create legitimate agreements with clients through lending contracts.

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