If we really need money urgently, we really need money for whatever reason or necessity, where do we go to find money or borrow money?
Financial problems that require borrowing or lending are all the result of a lack of liquidity. The starting point is that we may not have savings or may not have enough. It may also include wrong spending behaviors.
But sometimes, the reason why many people have to borrow money is because of problems that arise from real necessity, whether it is problems caused by family members, problems with expenses that occur without planning, such as medical expenses, children need money to go to school, children need money to give birth, etc.
With these financial problems, working people who lack liquidity need to find help.
If you need urgent money by wanting to borrow money or become in debt, it is now much easier than before because there are many options for working people. But let’s divide it into 2 main categories for easy understanding as follows:
The first group is unsecured loans:
Such as cash cards, various credit card loans, or loans for retail debtors offered by various banks.
This type of unsecured loan has a fast approval period (depending on the loan amount). The speed of getting the money also comes at the cost of very high interest rates (some as high as 28% per year).
The second group is secured loans:
For example, if we have land, a house, or a condo to guarantee a loan, if we use this type of asset, if we really need to use the money urgently, this option is not suitable because the loan application process takes a long time to receive the money, maybe several months, because the bank will have to assess the asset and assess our income to see if we have the ability to repay the debt.
Or if we have a car or motorcycle, we can also bring the registration to pawn. As for pawning the registration of both cars or motorcycles, it is considered to get money quickly as well. But you have to understand that interest must be paid. The annual interest is approximately 15%.
Therefore, the basic principle of finding a source of loans for working people is to look at the interest that we have to pay after borrowing because interest is our financial burden in the future.
If you want to get money very quickly and do not have collateral, the interest rate on the loan will be very expensive (interest rate ceiling 28%), but the interest rate on the loan will be low if the loan is secured, but it also depends on the quality of the collateral used (e.g. pawning a car or motorcycle, interest rate ceiling 15%).
So, do working people like us still have other options to choose from?
If you need urgent money, but there is a problem that many people cannot find, which is that some groups of people cannot access financial services from banks, maybe because of bad credit or because they do not meet certain conditions for receiving a loan, causing them to have to turn to other options. Most often, the first option is to borrow from friends or people close to you.
Because I think, let’s just lend money to friends and not have to pay interest. Yes, it’s true if friends can lend us money, but will they lend us money many times? And will they give us the amount we want? Therefore, it’s difficult to hope to borrow money from friends. Many people have lost friends because of borrowing money (sometimes friends intend to borrow from us as well).
Even worse, you can get money from informal lenders. This is a serious problem, and the more you borrow, the worse it gets. You end up with debts that are overwhelming you. No matter how much you spend, it never runs out. Therefore, this option should be completely eliminated.
Peer-to-Peer Lending, an alternative for working people to borrow money without having to rely on banks
Originally or currently, banks act as intermediaries by accepting deposits at very low interest rates and then lending those deposits at much higher interest rates. The banks earn profits from the difference between interest rates on loans and deposits.
Peer-to-Peer Lending is a loan between individuals without going through a middleman like a bank. There is a Peer-to-Peer Lending Platform to support it, so borrowing money is not limited to just our friends or people close to us, but anyone, and it is not necessary to know them in advance.
What is a Peer-to-Peer Lending Platform?
By definition of the Bank of Thailand, it is a service provider of electronic systems or networks that act as an intermediary to support the creation of loans between borrowers and lenders by matching those who want to borrow money with those who want to lend, as well as facilitating the making of loan contracts, loan repayments, and debt collection, which is another option that helps people access loans more conveniently at a cost that is appropriate for the borrower’s risk and increases investment options.
Currently, there are 3 Peer-to-Peer Lending Platform service providers that have tested with the Bank of Thailand and have been granted permission to open the service: Deep Sparks Peer Lending Co., Ltd., Nestifly Co., Ltd., and Peer Power Platform Co., Ltd.
The benefits of Peer-to-Peer Lending Platforms are two-sided:
- First, borrowers have more options to access funding sources, making it easier, more convenient and faster, because many places that provide services can provide results within 1 day, etc.
- The second side, the lenders. It is not that there are only people who want to borrow money, but there are also people who want to lend money, but they are afraid that if they lend money themselves, they may not get interest or the principal back. Therefore, the arrival of Peer-to-Peer Lending Platform is an interesting channel for lenders who have idle money and want their money to grow more than a fixed deposit.
Share Loan, another Peer-to-Peer Lending Platform from NestiFly
Why is it called a “ Share Loan ”? Because it is a loan using SET100 shares as collateral.
The simple principle is that people who want money or borrowers must use their own shares in the SET100 as collateral. As for those who have extra money and want to lend, they don’t have to worry that there will be a problem after giving the money because the borrower uses the shares as collateral. All transactions are made through the platform, and the borrower and lender do not need to know each other.
Who is NestiFly’s loan suitable for?
- First of all, those who want to borrow must have stocks in SET100 or to use as collateral. For example, bank stocks (BBL, KTB, SCB, etc.), communication stocks (ADVANC, DTAC, TRUE, etc.), energy stocks (BGRIM, EGCO, GULF, etc.), hospital stocks, retail stocks, etc.
- Salaryman or working people: According to the latest information, referring to statistics from the securities business, the number of investors who opened accounts in the stock market has reached 3.3 million accounts, which found that the proportion of working people or salaried people is very high. This is due to the interest in investing and the stock market is another source that provides high and interesting returns. Therefore, if a salaried person or working person who has already invested in the stock market and has stocks in the SET100, if they need a lump sum for emergency expenses, they can use this service.
- Business Owners: Those who have a proportion of savings and investments in the stock market and have shares in SET100, if they need capital to start or expand their business or need liquidity in working capital, they can also use this service.
If I borrow money from NestiFly, how much interest do they charge?
The loan period of Nestifly will be short-term, 3 months or 6 months. The borrower’s burden will consist of interest on the loan and fees, which will be determined by the assets or shares that we use as collateral.
Nestifly uses the LTV (Loan to Value) principle, which refers to the ratio of the loan amount compared to the value of the shares used as collateral. It ranges from 50%, 40% and 30%, depending on the risk of the shares used as collateral.
Let me give you an example.
The first working person wants to borrow money for emergency expenses. He has 20,000 SCGP (SCG Packaging) shares. The price on the day of the loan request is 39.50 baht per share. This means that the total value of the shares is 790,000 baht.
SCGP is in SET 100 and Nestifly has given the highest LTV to this stock, which is 50%. This means that if he uses all SCGP shares as collateral, he will get a loan of 50% x 790,000 = 395,000 baht.
He has the option to borrow 30%, 40% or 50% of the previous amount because the interest rates and fees are different, such as:
If he chooses the full ceiling, which is LTV 50% 395,000 baht, the burden of this loan is 5.75% (interest * 3.75% + fee 2%) for a loan for 3 months or 6% (interest * 4% + fee 2%) for a loan for 6 months, with the interest rate being per year.
Another worker, the second person , has savings left over but doesn’t want to deposit them in the bank because the returns are very low. So he chooses to lend money in Nestifly and Nestifly’s system matches his money with the first worker, so he gets a return of 3.75% for a 3-month loan and a return of 4% for a 6-month loan.
See more information on NestiFly’s interest rates and investment returns.
Benefits of using NestiFly’s “Share Loan”
Think about the previous situation. If we had stocks and now the stock market is not doing well, but we need to urgently use emergency money, we have to sell the stocks even if we have to lose money in order to change it into money to use. But when time passes, the stocks bounce back and make a profit. We cannot help but feel sorry because we do not have those stocks in our hands anymore.
On the other hand, if we need urgent money, we use the same stock as collateral for a loan with Nestifly. Even though our stock is at a loss, we can still borrow the loan. However, this stock cannot be traded while we use it as collateral for the loan. The advantage is that our stock still exists. If there is a dividend from this stock, we still get it. This means that we get both the loan and our stock still exists.
This is an online Peer-to-Peer Lending platform that provides borrowers with more convenient access to funding sources, while also providing lenders with a new investment option to create financial opportunities and generate appropriate returns.
In terms of safety, are there any concerns?
Nestifly has Blockchain technology and maintains all assets and transfers with leading securities companies, along with a system to monitor the value of collateral.
Conclusion
Financial planning is still important. If we have some savings for investment in the capital market, if we need money urgently because we are really facing a liquidity problem, good stocks that we have gradually accumulated can be used as collateral for a loan. And importantly, by using stocks as collateral, we also get lower interest rates and fees for the loan than borrowing money from cash cards, credit cards, or pawning the car registration, etc.
However, you must also consider, plan, and look at other options because borrowing money is not just about getting easy money, a lot of money, or fast money. Please think about the future burden that you will have to pay in installments and the interest that you will have to pay.
Because when you have debt, the responsibility of earning income to pay off the debt is something you have to think about as well.
For more articles on personal financial management, please visit:
What can a personal financial statement tell us about our financial habits?
Personal financial management is a very important skill, but it is not taught in schools.
