Fintech Debt Management merely refers to applications of financial technology under debt management. Prior to understanding fintech debt management, it is crucial to understand the concept of debt management.
Debt management is a formal agreement amid a debtor and a creditor that addresses the terms related to the existing debt. This agreement is called the debt management plan. This is crucial both for the creditor and the debtor alike. For the creditor, this helps in reducing the unsecured debts thereby aiding them in regaining the financial control. The debtor on the contrary benefits in various ways namely enjoy the reduction in the debt amount to be repaid, long repayment period and securing lower rates of interest.
Facts about Fintech Debt Management
The truth is, debt management can prove immensely useful for customers having unsecured debts and multiple credit cards. Any credit counseling agency generally will create a plan of debt management for its customers. This plan will help in consolidating all their debts to help him/her in making single monthly payments and then subdivide the sum amid all creditors as per the agreed plan.
It is this that will aid the debtor in continuing to repay the debts at pocket-friendly prices which will not result in any undue financial stress. The debtor at the end will clear all the debt as well as regain their financial freedom. The Fintech debt management plan uses technology over choosing traditional credit counselors. This includes the utilization of a program which can be custom made as per one’s situation resting on their debt’s information and income.
The majority of the debt management programs will allow one in viewing the list of their current interests, debt balances and the years which they require in paying off. The current creditors can be eradicated and new creditors may be added as one may need. If one, for instance, has settled at once a particular creditor’s debt, the creditor may be removed. Here that person will get indebted to the new creditor; they can be made a part of the program. To know more read Fintechdebt settlement reviews.
Features that Lure
Fintech debt management includes mobile and online debt counseling solutions as well. This means one will no longer require meeting the counselor in person for availing the services. Now take a look at the various benefits of Fintech debt management.
- First and foremost, it will allow one in becoming more organized as they need to pay just one bill that they will get distributed amid all their creditors. Possessing a couple of debts that need to be cleared on various dates can be disastrous especially when one skips and forgets the due dates. The creditor, in fact, will slap them with the late charge that again will further increase their debt.
- In fact, Fintech debt management will provide one a break by keeping them away from the harassing calls of creditors. It similarly will diminish their vulnerability regarding late fees payment.
- It has lower rates of interest.
- Will not affect one’s credit score
- Reduced monthly payment owing to fall in interest
All About Fintech
Lending is an ancient profession and is indeed the reason for banking systems for taking shape. The truth is, there are lots of evidence related to money lending amid traders, farmers and merchants during the 2,000BC. When lending began receiving a formal structure, the banks began evolving and prospering. Keeping the history aside, the banks have emerged victorious as people are indeed an inherent requirement of some things- borrowing cash, keeping the money safe and a system where the cash is accessible easily across geographies.
Over the centuries this more or less remained the same. People deposit their money, the bank keeps aside a part of it as reserves and lends out the remaining on which interest is charged. They also offer interest to every depositor, yet there is a difference amid what they get from lending and that paid to the depositor for becoming their income. Until now, however, lending has largely been consigned to banks and NBFCs. Common people had no means of considering lending like the investment instrument and making a return on the same.
In India, especially in case of investors, the option was the traditional investment instrument such as saving PPF or Fixed Deposits that deliver returns which do not beat avenues or inflation like SIPs and mutual funds which leave several factors out of control of the investor. Rarely is it surprising in this case that investors in India in different age groups demanded better avenues for investment which enable them to save as well as grow the wealth? But in the last few years technology has brought about a drastic change in the financial arena. A new term had been coined for denoting the same- Fintech.
The Birth of Fintech
A key issue associated with traditional capital investment avenues is that hands-on involvement which they need. Mutual funds and stocks need investors in being ever-vigilant regarding the market conditions as well as the performance level of their investments. Investors with less experience require consulting fund managers from time to time for the right products prior to investing and the performance of the portfolio is dependent heavily on the financial consultant’s acumen that is advising that investment.
Such investments moreover are governed to extreme degrees by numerous market factors that are highly unpredictable. Often investors require waiting for long prior to them realizing their capital returns.
The high-risk, much-delayed technique does not fit the current age investor in the era of evolving preferences of consumers and digital empowerment. They neither possess the patience nor the time that instruments such as SIP and mutual funds need. Rather they desire their capital in generating the utmost dividends quickly and in a risk-free way. It is here where different Fintech instruments play an imperative role.
The bottom line is, the underlying lending, clearing, payments and settlement processes have undergone a major transformation post-advent of this technology. These platforms armed with consumer data, latest digital technologies, automation, and cutting-edge analytics along with offering investors a lucrative medium for maximizing their extra capital will also cut down financial risks thereby expending an experience that is more hassle-free.