The Global Financial Crisis of 2007 hit families in certain American locales extremely hard. The resulting loss of jobs and stunts in growth meant that many families saw their wages decline or stagnate even in times of rising costs.
This resulted in families taking on more credit card debt to alleviate the financial stresses of the time. The average American family currently has over $15,000 in credit card debt.
Because credit cards operate on revolving credit, their interest rates are often above 20%. This can create a trap that is hard to escape; some borrowers are only able to pay off the interest on their balance. For this reason, EC Lending has begun to help their customers refinance this debt at significantly lower rates.
The idea began in 2014 in Escondido, California. The company’s founders realized that credit card debt was becoming an excessive problem in the credit industry and that many borrowers were extremely serious about paying it off — they just couldn't due to interest rates. EC Lending, which started as a loan broker in the automobile industry, then made a definitive decision to tap into the market.
Success has been rampant so far. EC Lending LLC of San Diego, California has reported that the amount of clients that have come to them in search of refinance has way overshot their initial profitability projections. In addition, by analyzing a consumer’s credit report, EC Lending is able to target low risk borrowers who have clear sources of income. This reduces risk on the lending side as many refinancers are often considered risky borrowers. In order to provide rates that are competitive with industry leaders, EC Lending has had to invest serious time into selecting their initial batch of clients.
Despite the economy’s recent recovery, experts believe that credit card debt is now part of America’s mentality, and that balances as a whole will continue to rise. The reason behind this is that to spur investment into the economy the government has increased the money supply which has resulted in bank’s reducing the requirements for obtaining all forms of credit.
This means that much of the country is now seeing there debt rise rather than fall, despite positive economic signs. For this reason, firms like EC Lending are likely to experience continual growth into the future as consumers continue to spend more than they can afford despite increases in wages.