An innovative new mobile application could help those struggling with their finances.
The ‘Agree It’ app enables Facebook friends to form loan agreements and borrow money, offering a different solution to high-interest unsecured loans from other sources and is just another new development of the Peer-to-Peer finance concept.
It means both parties can reach agreements that are mutually beneficial in financial terms, while borrowers also stand to see more competitive rates than with payday loan companies.
With saving rates on most accounts also struggling to beat inflation, it provides a viable alternative for people needing finance.
Several elements of the app are very similar to Peer-to-Peer lending sites, whereby both lending and borrowing sites benefit from more competitive rates.
An alternative to payday loans
Meanwhile these sites themselves then take a small commission for processing the arrangement and for applying all the necessary credit checks.
However, the credit check aspect could be bypassed on the app with past loans that were taken out via the app being the principle check point.
Without financial regulation, the app is based on trust rather than any form of insurance that the repayments will be based on.
Peer-to-Peer lending takes a similar approach, although these shortfalls do not seem to deter customers who prefer it to payday loan companies.
“Poor credit ratings and a reluctance to ask for help closer to home means UK residents are increasingly taking on unsustainable debt that ruins lives,” explained founder of the app, Omar Fansa.
“By seeking and offering funds within our social network, we can sidestep expensive credit and poor deposit rates and enable borrowing between friends and family at affordable rates.
“The app offers people the chance to support others within their social network and gain a financial return.”
Different ways of managing finance
A lot of the pressures associated with short-term finance firms can be removed by using the app, as well as the fact that deals will be financially superior.
One issue that could cause concern is the relative “high risk” of lending to those with bad credit records, as repayment is not guaranteed.
An alternative to borrowing money can be to manage finances more astutely with the assistance of a prepaid card.
This limits spending to the amount which is solely on the card and provides additional security as far as fraud is concerned.
Cutting back spending can be pivotal when finances are tight, while borrowing should always be considered as a last resort.