Operational Differences Between Quick Loan Companies and Traditional Banks
Vasama, Kaisa (2016)
Vasama, Kaisa
Haaga-Helia ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016111816497
https://urn.fi/URN:NBN:fi:amk-2016111816497
Tiivistelmä
The need for this topic was discovered in practice at the commissioning company, a Finnish bank called OP, because the number of customers with credit report records seems to be increasing rapidly and the legislative changes in the consumer protection act are also forcing banks to change some of their operations.
The goal of this study is to find out how the operations of quick loan companies differ from those of traditional banks, how the two alternatives have adapted to the legislative changes that have taken place and the possible differences and similarities of these two on an operational level. The study was conducted as a desktop study, using literature, article and legislative documents as research material.
The report introduces the basics of loan theory, how consumer loans work and what kind of alternatives a consumer has. The study also presents the most popular consumer credit alternatives from both the bank side and quick loan companies and shows calculations on the true costs of each of the examples. The legislative changes that have taken place, to control the interest rates, advertising and granting of the credits, are also presented.
The study showed that eventhough the bank products and those of quick loan companies may seem to be similar products, they actually cater to rather different needs. This is because the banks do not provide consumer credits for as small amounts of money as quick loan companies do. Another significant finding was, that the same authority that supervises banks does not supervise the quick loan companies, and therefore their responsibilities are different. Quick loan companies do not need to have information on their customers’ other outstanding debts, which might cause them to grant a loan to someone that is not necessarily credit worthy.
The goal of this study is to find out how the operations of quick loan companies differ from those of traditional banks, how the two alternatives have adapted to the legislative changes that have taken place and the possible differences and similarities of these two on an operational level. The study was conducted as a desktop study, using literature, article and legislative documents as research material.
The report introduces the basics of loan theory, how consumer loans work and what kind of alternatives a consumer has. The study also presents the most popular consumer credit alternatives from both the bank side and quick loan companies and shows calculations on the true costs of each of the examples. The legislative changes that have taken place, to control the interest rates, advertising and granting of the credits, are also presented.
The study showed that eventhough the bank products and those of quick loan companies may seem to be similar products, they actually cater to rather different needs. This is because the banks do not provide consumer credits for as small amounts of money as quick loan companies do. Another significant finding was, that the same authority that supervises banks does not supervise the quick loan companies, and therefore their responsibilities are different. Quick loan companies do not need to have information on their customers’ other outstanding debts, which might cause them to grant a loan to someone that is not necessarily credit worthy.