Too Much Payday Loan and Credit Card Debt? Try Consolidation

Would a consolidation loan help out payday loan and credit card debt? Sure it will! Consolidation loans will help out any kind of debt which cannot be handled correctly with the current budget.

Often times, an individual will fall into the budget trap of a short-term loan cycle. The short-term loan comes easy, but the payoff is more difficult than planned. The trap begins where a person needs to take out another fast cash loan to either payoff the first one or make up for the difference towards other bills. The cycle of obtaining new payday loans every few weeks end up eating away at income and causing multiple problems for other areas in the budget. High interest when not paid off on time or multiple loan fees when too many are taken out in one year can get cumbersome.

Payday advances are not usually the first stop for financial help by an average person. Credit cards carry a large percentage of individual debt. A consumer wants something, but does not have the money in their checking account, so a credit card is used. Some people will charge on a credit card just to add points to a reward bonus offered by the card carrier. The intent may be to pay it all off with the next statement. This plan has a high failure rate. Whatever the reason is to use the credit cards, no one is alone in carrying big debt.

Once credit cards are full and new ones are denied, a person’s credit score has been heavily negatively affected. With poor, credit options diminish and payday loan usage increases. People who once said they would never use these short-term loans are now enjoying their convenience. With limited usage and a plan for payoff, these loans have helped everyday people out of budget crises. They are also, too often, a financial disaster.

Consolidation loans are very helpful to get out of the short-term loan loan plummet. Include credit card debt as well. Grouping multiple payments into one payment is more manageable on a fixed income. It also frees up cash each month so you can build a savings and take care of other unexpected costs without adding more debt to the pile. Look to a credit counselor of maybe you have a friend or family member with know how in order to prevent your financial status from repeating itself.

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Installment Loan No Credit Check – Money Availed Despite Bad Credit

Installment loans no credit check loan are availed in two forms; secured and unsecured, the choice is generally the borrower’s. When the lender is verifying your personal information, you credit history plays a big part when deciding on whether they were to advance you with a loan and on what terms. A good credit history attracts an attractive loan deal while a poor score attracts the opposite. In fact, the people whose credit score is below average usually get loan deals with escalated rate of interest and fees. The reason for this is simple enough; to safeguard the lenders in case they fail on their loan repayment once again. Some lenders totally refuse to advance these people with a loan whatsoever. However, the loan market nowadays is full of loan options and everybody can get a deal that suits their needs. One such loan option is to take an installment loan no credit check which will assist you despite your financial adversities.

With installment loans no credit check, your past bad credit records, for instance, CCJs, arrears, defaults, bankruptcy and IVAs should be the least of your worries, your loan request will always be honored. These loans are always advanced to the applicants irrespective of their credit scores. Installment loans no credit check are obtained to settle numerous financial purposes, example, for consolidating your previous debts, for settlement of fees arrears, footing outstanding utility bills, for renovation of your house, for buying a new car, for meeting holiday travel and other expenses and for many other such uses. In simple terms, the loans are not limited to any specific purpose, the borrower can do whatever they want with the advanced amounts.

Installment loan no credit check is availed in two forms, that is secured and unsecured form. What form to apply for depends on borrower. For the secured form, the lender can avail any amount the borrower asks for as long their collateral amount to the loan amount. The more expensive the collateral is, the more that the lender can advance and the vice-versa is true. The rate of interest and others charges are lower as compared to the unsecured loans. On the other hand, if you borrow you money on unsecured form, expect to get a higher rate of interest, also the advanced amounts are generally lower. The loan to be advanced is dependent on your immediate income profile and repayment capabilities.

There two ways in which you can apply for installment no credit check loans; offline and online. The online method is the simplest and the most hassle free amongst the two. Online lenders provide their services around the clock as opposed to offline lenders. You can access the funds while at your home, office or at whatever place you are based, location does not really matter.

The reason the installment loans no credit check loans have become popular of later is their repayment installment constant schedules. The agreed installments schedule does not change irrespective of the economic situation of the time, the installment remains the same. A borrower borrows a chunk of cash at a given time then repays it back over a specified duration in equal installments. If you repay back earlier than the agreed time, the installments do not change, they remains the same.

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Instant Loan Without Credit Check

Loans no credit checks are basically a finance scheme, which are aimed at fulfilling your urgent needs of money. The no credit checks Loan is also called payday loan and is the best option to help you when you need fast cash to pay your bills.

At time, people face a condition wherein the deadline of depositing various bills or for any purpose for which only a day is left to deposit fee and due to lack of time they cannot arrange money from any other source. In such urgent requirement of money a no credit check loan comes to the rescue of borrowers. A natural question is how-since in case of a no credit check loan, lenders do not verify the credit history of borrower and that they provide loan merely on the basis of information provided by the borrower in the loan application, the whole process takes hardly takes any time.
Another significant advantage is that the loan application process can be completed by the borrower online from anywhere even in the comfort of his bedroom. Therefore, borrower does not need to visit lenders’ offices spread across the cities.

Now see how the whole process works-Suppose your have fulltime employment and so you get your salary on the 2nd of every month. Usually people spend most of their salary in next 20 days. On 21st day, suddenly you came to know that your child’s school has planned to go for picnic on 24th and that you are required to pay a certain amount to the school by 23rd towards the planned picnic. Now you know you wil get your salary on the 2nd day of the coming month but you can’t wait till 2nd as the picnic is planned for 24th. Here the no credit check loan comes to your rescue.

You apply for the no credit check loan on 21st itself and you get the money credited in your account on 22nd and subsequently you can pay the fee to school on 22nd or 23rd itself. On the other hand you either give the lender a post dated check of the requisite amount to be encashed on 2nd of the next month or you commit to pay the lender in cash on 2nd. This way, you are benefited by the no credit check loan.
On his part, the lender charges a certain percentage of the principal loan amount as interest which is his profit, also called service charge towards the services provided to you. Since no credit check loans are meant for a very short duration, the rate of interest to be charged usually remains higher than that of any other category of loan. For borrowers, therefore, it is advisable that they not extend the loan repayment date because it involves a certain percentage of the sum of the principal loan amount and interest charge over it as penalty.

The eligibility for no credit check loan varies from lender to lender but in general, an applicant must be at least 18 years old, have a checking account, and have a job, which provides a steady income. Some lenders require a minimum monthly salary and require that the checking account has been open for at least three months.

The loan amount in case of a no credit check loan depends on your monthly income, your monthly expenses, any monthly payment, which you make towards any running loan etc. Similarly, rate of interest charged depends on various factors and usually remains higher than any normal loan. Usually, a no credit check loan ranges from ₤100-₤500, depending on the borrowers monthly income. The duration of the loan is until the next payday, at which time the loan amount and the finance charge will be automatically deducted from the borrowers checking account. Once approved, the cash advance is directly deposited into the borrowers checking account overnight.

Therefore, finally, with loans no credit checks, verification of ones credit history is not part of the approval process; making it the best option among various categories of loans. Borrowers can apply for loan no credit checks lending online and typically find out in just a few hours if they have been approved and for how much.

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Small Loans without Credit Check – Loan Without Hassle

Small loans without credit check are loans, which are short, termed, involving small disbursing amount and which don’t require any credit check. These loans can be interpreted as something, which fills the gap between the urgent financial requirements and your next pay cheque. The majority of loan seekers belong to salaried class but it doesn’t stop you from availing these loans if you wish to procure it in secured format. The loan is typically designed in unsecured form. This is done because of the brief amount of time involved in the transaction ranging from the loan allocation to the retrieval.

Small Loans Without credit check: getting started

If you have decided to opt for the loan then you must be clear about the amount and your repaying capabilities .As the loan is usually in unsecured format and no credit check is done so lenders in order to feel safe require some documental proofs. Thus to fulfill the eligibility criteria:

o You must be above 18 years of age and a citizen of UK.This is required to overcome the legal procedures.

o You must furnish your recent pay slips as a proof of your consistent employment. This is a precautionary measure taken by the lenders.

o You must have a bank account for smooth transactions whether it may be the loan amount or the repayments.

o You are also required to furnish a post-dated cheque equivalent to the repayable amount.

This is another precautionary step taken by the lenders as the non-repayment can lead them to encash the cheque ensuring the retrieval of their amount.

Small Loans without Credit check: Amount and Interest rate

As the name signifies the amount involved is lesser, it is usually lesser than £5000.
The interest rate charged is quite large. This is because these are very short termed loans and is offered in unsecured form also they don’t require any credit check. So the interest rate is large to administer confidence in the minds of lenders about their investment. However the amount and interest rate varies from lender to lender .so in order to get what suits your necessities and capabilities you must give an exhaustive search.

Small Loans without Credit Check: uses and advantages

The loan can be use to meet emergency finance requirements. The amount can be employed in order to meet any medical bills or car repairing or any small problem that crops up immediately.

The loan has a number of advantages

o The loan is sanctioned in most of the cases within 24 hrs so you have cash at your disposal within no time.

o Not much pare work is required as no evaluation; neither credit check nor verifications are required. All you need to have is an employment/income proof.

o It can be borrowed both by the salaried persons or self-employed persons.

o You don’t have to tinker with your fixed bank deposits, shares or draw money from your other investments for some small sum as your urgencies are taken care of by Small loans without credit check

To sum up Small loans without credit check act as the saviors in financial crunch. However the loans should be obtained only if there is a genuine necessity because the amount has to be repaid also.

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Payday Loans: No Credit Check No Fuss Loans

Payday loans are the fastest and most convenient option for getting a cash advance for emergencies before your next payday. However getting payday loans and their repayments involve certain important aspects. Herein we are attempting to answer all your general queries related to Payday loans and we hope it will serve as a tool to open up any mystery surrounding payday loans or cash advance.

What Is A Payday Loan Or Cash Advance Loan?

We daily come across many loan types like housing loan, personal loan, and education loan. However, the payday loans are a new buzz in the market, and it is very popular. This loan is known by many names like “Cash Advance”, “Paycheck loan”, “Check loans”, and “Payday advance loans”. Let us understand what is a payday loan or cash advance loan and how and when it should be used for your maximum advantage. Payday loans are unsecured loans, which can be used for meeting your emergency financial needs and is paid back out of your next paycheck on your payday. Thus, payday loans are the shortest tenure loans among the other loans available in the market.

Are there any limitations on payday loan or cash advance loan usage?

Many a times we face a situation when we need money badly but feel like our hands are tied as our payday is still several days away. In such a scenario, we either have to shelve or defer our plan of purchasing something or go for a heavy interest credit card loan to meet the obligation. The requirement could be to pay up unexpected medical bills, your kid’s school fee, to avoid bouncing of your issued checks or any other financial obligation. In such trying times, payday loans or a cash advance comes in handy. Thus, you can use this cash advance for whatever purpose. There is no restriction on the usage of payday loans.

Am I eligible to receive a payday loan or cash advance loan?

The best thing about payday loans is that they can be had even if your credit rating is not very good. The second best thing about payday loans is that taking a cash advance does not affect your credit rating. All you need to be eligible to receive the payday loans is to have a running checking account and a regular job.

How should I apply for a payday loan?

To apply for the payday loans, we would say it is easier to do than to say. You can apply for payday loans online using Internet. You may be required to supply some basic information such as your Name, Address, and your employer details. Some companies offering payday loans may ask for your Bank Statement or pay stub over fax. The documents required by these companies for payday loans are minimum in comparison to other types of loans.

What is the fee charged for payday loans?

Before applying for payday loans, we suggest that you scan 5-6 companies for the fees they are charging. Some companies offer payday loans without any fee for the first week.

How much cash can I get with a payday loan?

The amount of payday loans ranges from $100 to $1000 depending upon the repaying capacity of the borrower.

What is the length of payday loans?

Normally a cash advance is supposed to be paid back on or before your coming payday. Therefore, the maximum length of payday loan could be up to 30 days. However, some companies are flexible with respect to the loan duration as well. Payday loans can be extended until the next payday. This extension of payday loans however comes at a price.

How long does it take to get a payday loan?

Payday loans are much easier to get and in less time than other loans. After applying for a payday loan online, you will get a telephone call from the payday lender. After completing the small formalities, the cash advance will be credited to your checking account the next business day.

Does this mean I can enjoy my pay without waiting for my payday?

Before you jump for a payday loan, please note that the rate of interest charged for these loans are higher than other loans. Extending the duration of payment will only increase the fees charged. The payday loans or cash advance loan should be used very prudently and only for meeting financial exigencies that cannot be avoided. Please remember that getting a payday loan or cash advance loan too frequently could upset your monthly budget and you may find it difficult to get out.

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The Benefits Of Getting A Personal Loan

A personal loan is usually not secured. It means collateral does not need to be provided by you when you borrow. The loan is offered to you by the lender on the basis of your credit and qualifiers. You can easily get the approval of loan, if you have a good credit. A lower interest rate can also be offered to you. Visit a financial institution or search online to get a personal loan.

Here is a list of some of the benefits of such a loan.

Lower interest rate – If you have good credit, then personal loans with lower interest rates can be availed by you. Around 15% APR on a credit card balance is paid by the people with lower credit card balance. But if you have good credit, you have to pay only 6% APR. While making a big purchase, it is considered as a big difference.
Use for many purchases – Your cash can be used by you for making any purchase. A loan of this type can be used even for purchasing a vehicle, starting a business or renovating your house. Restrictions may be placed by other types of loans on the usage of fund. But the conditions of using a personal loan are flexible and can be used for any purchase.
Consolidate debt – High interest debt can be consolidated by using a personal loan. Several smaller debts with high interest such as credit cards and student loans can be paid off by using a larger loan. Money on interest can be saved if you consolidate your debt by using this loan. Your debt repayment plan can be managed in a better way by combing several loans in one place.
Smooth your cash flow – Your cash flow can be smoothened by using a personal loan. A personal line of credit can be got by you, by using your personal loans. You have to pay a low interest rate in this alternate way of use. An emergency fund doesn’t need to be raised for future. The borrowed amount can be repaid by accessing your line of credit.
Boost your credit score – Your credit score is counted depending on your different types of accounts. One type of credit is represented by credit cards. In this case, you can use your credit score to handle your loans. Your score can be boosted slightly by adding instalment loans in your credit report.
Thus, save a huge amount on all your purchases by using a personal loan. Always remember to compare different loans before borrowing any sum.

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Five Reasons for Refusal of a Personal Loan

Don’t you wish personal finance were a mandatory course in college? Unfortunately, too many of us learn by mistake. When you need a personal loan and are rejected, you might be baffled as to what went wrong- and how to fix it. Here are some clues.

NO CREDIT

No credit is a situation where you have never used credit and therefore have no credit history for the bank to review. They have no way of making an educated decision on whether or not you will pay back a personal loan based on your credit history. No credit is worse than bad credit. Qualifying for and making regular payments on these types of introductory forms of credit can overcome a “no credit” score:

· Student Loans

· Secured credit card (includes a down payment amount)

· Being added to a parent’s or spouses good credit: card, car loan, etc.

LOW CREDIT

Low credit takes on several forms. If you’re using more than 30% of your allowable debt, it can negatively impact your score. Too many inquiries from shopping around for loans will also hit you hard. Lapses in payment, defaults, or bankruptcies are giant red flags and can take a long time to rebuild from.

Other things that lenders may look at are whether or not you have sizeable assets should you default on the loan. They also check to see if your debts are diversified or if you are only carrying one type of debt.

INCOME

Proof of income is generally required when applying for a personal loan. If you are unemployed or underemployed, it can work against you in the loan approval process. Lenders may also require a work history to see how long you have been with your current employer, and to determine if you typically have job stability. Frequent job loss or change will tell a creditor that your payments may not be reliable.

PURPOSE OF THE LOAN

Believe it or not, your application can be rejected due to your proposed purpose for the loan. Financial institutions have the right to set up the parameters surrounding their disbursements and can accept or reject your application based on what you want to use the money for.

BLACKLISTING

If you’ve defaulted on debt before, your name may be put on a list of whom not to loan to,’ also known as a “Blacklist.” This will follow you around for a long time and is difficult to erase. If you do resolve the debt issues, get documents to prove the resolution.

NO CREDIT CHECK LOAN

If you need a loan now, but are concerned that you might not qualify for a personal line of credit, you can qualify for a No Credit Check Loan. You could be on your way to a better financial future in no time!

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A Latin Impact on the Finance Industry

Financial Institutions are a fantastic business model to learn from when considering ever changing market conditions. Their traditional target markets are stable, but, the needs of an emerging market, the Latino market is extremely underserved. It is certainly not for lack of money. Many Latinos have zero debt and healthy saving habits. The question arises, are financial institutions doing enough to serve this population? Are they adapting to the Latino needs? The answer is complicated.

There are two types of Latinos in the USA. One is the immigrant seeking a better life and wanting the American dream, whether they came through the proper channels or not it is irrelevant. The second, are the Latinos that are born here. These are two very different groups of people with different needs and goals. Most immigrants bring their culture, traditions, and customs with them to the US. Those born here develop a blended culture that is both Latino and American.

Financial Institutions are taking notice and making strides to accommodate this very economically influential population. The main reason is that there is a lot of investment in education and developing trust. An untold detail is that in Latino countries, people do not trust banks and financial institution because of corruption. Everything is paid in cash and there are no debt or traditional credit scores. This means that the Latino community have cash, probably stored under their mattress or in a shoe box. This is very dangerous considering that a house fire could burn an entire life savings. Another scenario is they could become a target for robbery. This is a foreign concept for Americans. What is happening is a huge learning curve, educating them on the process of building credit, saving their money in a financial institution, getting loans (mortgage, car, etc.), and most important having trust in the financial institutions.

The younger generations that are born here learn from their parents and surroundings. There is still a disconnect from the importance of financial products, building credit, and how that process works. Many of these young people are just translating for their parents, explaining financial products, and become an intermediary for conducting business. You will notice an increase in bilingual support at many financial institutions for this reason. There is still a lot of work to do in this regard, and this process will take time.

However, more and more financial institutions are offering products specific to Latinos. Information is becoming available in Spanish and more financial institutions are hiring bilingual and multi-lingual speakers. It will be interesting to see how we as a country adapt to this important demographic. It is truly an untapped market that has an important function in our economy for growth and stability.

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6 Home Loans Tips Before Applying

Applying for home loans could be dreadful, particularly on the off chance that you are a first-time home purchaser. There’s a considerable measure of printed material and indulgent preparing included. Yet at the same time, it is justified regardless of your exertion. This far reaching contract aide will walk you through the way toward securing financing for your home and make you feel that applying for a home loan is not that horrible all things considered.

1. Know about them Lender or Broker?

There are two approaches to apply for a home loan. To start with, you can manage a loan specialist or home loan organization straightforwardly. Second, you can procure a home loan representative who will help you look over an assortment of moneylenders. Most homebuyers think that its less demanding and less expensive to choose a loan specialist, without assistance from the outsider. In addition, with a specific end goal to locate an equipped and solid agent, you should do a really decent research and get references. That is the reason a great many people like to keep it straightforward and manage a bank themself. In a few circumstances, be that as it may, merchants can really work to support you. For instance, if your record of loan repayment is not all that good, an accomplished dealer might be exceptionally useful in shopping and arranging for the most ideal arrangement.

2. Know the True Rates

The publicized rate frequently snatches borrowers’ consideration yet it is really not the one that borrowers ought to depend on. The AAPR or “the genuine rate” is a much better guide, as it checks every one of the expenses and charges that will happen over the term of your loan. In spite of the fact that the AAPR is a stage up from the publicized rate, it is still only a quantitative device. Once you’ve chosen a couple loans in view of their AAPRs, you will at present need to investigate their different elements. Some worldwide think-tanks, for example, CANNEX and AIMS Home Loans can outfit you with some canny data about mortage loans and help you limit down your choices quicker.

3. Know about loans details & terms

When you search for a home loan and read through various home loan terms and conditions, you will go over money related wording that you most likely won’t discover somewhere else. It is critical for you to comprehend those home loan terms with the goal that you can secure the most ideal arrangement. Truth be told, numerous money related foundations and land firms offer free homebuying workshops, which can help you comprehend what individuals are discussing in land business. Here are some fundamental home loan terms that you ought to know:

APR – Yearly rate, expected to mirror the yearly cost of acquiring. It is otherwise called the “promoted rate” or “feature rate”, that ought to make it less demanding for borrowers to think about moneylenders and loan alternatives.

Closing Costs – Shutting costs incorporate “non-repeating shutting costs” and “prepaid things.” Non-repeating shutting expenses are any things to be paid only once as a consequence of purchasing the property or acquiring a loan. Prepaid things are things which repeat after some time, for example, property charges and mortgage holders protection. Normally a moneylender should gauge both the measure of non-repeating shutting costs and prepaid things, then issue them to the borrower inside three days of accepting a home loan application.

Collateral – An insurance is the thing that you use to secure a loan or ensure reimbursement of a loan. In a home loan, the property is the security. The borrower will lose their property if the loan is not reimbursed by assentions of the home loan.

4. Check Your Credit

When you apply for a home loan, your whole record as a consumer will be investigated by your forthcoming moneylender. FICO ratings more than 620 have a decent risk of getting affirmed for a home loan with a decent financing cost. On the off chance that your score is beneath 600, in any case, your application might be denied or you may get affirmed at a much higher loan fee. Whether you have a decent or terrible financial assessment, what you ought to do is check your credit report before your bank does. You can get your credit report from Equifax, Experian and Trans Union. In the event that there are any mistakes, attempt to contact these three organizations and clear them up. This procedure can take a great deal of time, so it is something you ought to do a while before apply for a home loan. Paying down your budgetary commitments, for example, Visa obligation and auto loans, before applying for a home loan is additionally an extraordinary thought.

5. Don’t afraid from your bad credit score

Regardless of the possibility that you have an awful financial record, you ought to in any case glance around for the best arrangement. Don’t simply expect your lone choice is a high-taken a toll loan. On the off chance that your credit issues were created by unavoidable circumstances, for example, ailment or a brief loss of pay, disclose your circumstance to the loan specialist or intermediary. Ask a few banks what you need to do keeping in mind the end goal to get the least conceivable cost.

6. Verify and clarify all the things

A pre-endorsement letter is extremely useful, yet not as awaiting as you may think. When you locate a home you’d like to purchase, and your offer has been endorsed, you will need to do a reversal to the moneylender and submit archives that confirm your monetary data to get a loan. Your benefits will be assessed. The loan specialist will investigate your work history. You ought to have no less than two years of business history in the same profession. On the off chance that you are new to the work power, advanced education may help you get endorsed. In the event that you don’t have a sufficient record as a consumer, you may utilize normal regularly scheduled installments, for example, lease, telephone, or satellite TV to demonstrate the loan specialist that you are a reliable shopper.

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The Role of Islamic Finance in Economic Stability and Social Justice

One of the most distinguishing times for the U.S. Islamic home financing industry began in February 2007. The Federal Home Loan Mortgage Corporation (Freddie Mac) sent out a press release announcing that it would no longer buy the most risky subprime mortgages and mortgage backed securities. Two months after the announcement, a leading subprime mortgage lender filed for Chapter 11 bankruptcy protection. Three months after that bankruptcy filing, nationwide financing entities warned of “difficult conditions” ahead. Manifestations of such difficult conditions appeared on the horizon of the financial market when once well-established mortgage companies suddenly began to file for Chapter 11. Similar circumstances reached the U.K. as the Bank of England cleared an authorization to provide liquidity support to Northern Rock, the country’s fifth largest mortgage lender. Five months later, Treasury of the United Kingdom became the owner of Northern Rock.

Up until that point, the gravity of these “difficult conditions” was not fully understood by most of the populace. Late in 2008, the Federal Reserve Bank of New York was authorized to lend $85 billion to the AIG. This was the beginning of the most serious recession in the United States since the Great Depression. What followed was a chain reaction that led to an unprecedented global financial crisis, as the world suffered from rising unemployment, rampant foreclosures, and severe skepticism of financial instruments.

This led to a renewed spotlight on an unfamiliar market segment that appeared comparatively more stable and, more importantly, far more ethical: the Islamic financing sector. From the financial centers in Malaysia to the Middle East, spanning across over seventy countries, Islamic finance in the U.S. increased from $5 billion in the 1980s to $1 trillion in 2010. This phenomenal growth caught the attention of global investors who were seeking to safeguard their investments through more ethical and reliable financial instruments. When financial sector workers realized that these Shariah-compliant instruments avoided many of the worst effects of the global financial crisis, it became an attractive investment vehicle to support a more diverse portfolio. The Shariah-compliant financial sector has avoided investment in predatory lending businesses and overly leveraged financial instruments due to the strict ethical nature of the Shariah governance system. News and media outlets started to cover this ancient yet unfamiliar industry in hopes of learning from the mistakes of the conventional banking sector.

The concept of the modern Islamic financial services industry is rooted in the principles of Islamic legal jurisprudence that deals with financial transactions, a branch of Islamic jurisprudence called Fiqh Al Muamalat. Fiqh Al Muamalat is a framework under Islamic Law that charts the conduct of Muslims in commercial or economic endeavors. Islamic finance products and rulings are based on specific injunctions from the Quran that prohibit certain features of financial transaction models and related economic activities.

The Quran forbids interest, also called usury or riba. The underlying reasoning is that Islam considers lending to be a charitable act to help another member of the society in his/her time of need – therefore, profiting from someone’s hardship is strictly forbidden. In the conventional banking system, when interest is charged on a loan, the risk of that transaction is transferred to the borrower while the lender gains profit from the interest-based transaction. There is no consideration for the hardships endured by the borrower in the event they undergo any loss from the transaction.

By its nature, Shariah law prohibits unethical financial practices. It also promotes wealth distribution among all people to reduce poverty and inequity. This is manifested in the prohibitions of activities such as excessive speculation, gambling, and investing in products that are harmful for society as deemed by Islamic law (alcohol, pornography, etc). The structure of Islamic financial products and services, especially its prohibition in speculative transactions, has helped the industry escape most of the adverse effects of the global financial crisis. The governance model of Islamic financial institutions has been praised as an ethical alternative by institutions such as the International Monetary Fund and the World Bank. Economic experts have suggested that Islamic financial principles can be leveraged to promote financial inclusion that uplift the quality of life in developing nations. Islamic financial principles can also contribute to financial stability and economic development around the world.

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