Align Income Share Funding gives consumers cash in exchange for monthly payments, but does not call it a loan. Instead, Align offers revenue-sharing agreements (“ISAs”) in which consumers borrow money and then pay a fixed percentage of their income for up to five years. It is a new financial product that is becoming more and more popular, and regulators are fighting against what needs to be done against them. It is especially useful for someone who has to borrow money but does not have a stable income or does not expect to earn much in the next few years. The cost of your ISA decreases if your income drops. If you lose your job, you don`t have to pay back until you start earning money again. A borrower cannot know in advance what the “interest rate” of an ISA might be because of the nature of the instrument. If the borrower`s income is low, they could pay less than the amount borrowed. If their incomes are high, they could pay a lot more – although Align`s ISAs contain a provision that allows the borrower to complete the ISA with a buy-out if they have a sudden wind. Align is a startup financial institution, which is one of the few places where you can get an ISA in the United States.
Align, formerly known as Cumulus Funding, was launched in 2011 in Chicago in partial response to the 2008 financial crisis. The idea was to offer an alternative to credit for people who may not be eligible for financing from traditional financial institutions or have difficulty repaying due to unstable income. More than 5 years ago, in episode 45 of Money for the Rest of Us, I introduced participation agreements to partially fund the university. An income participation contract is a contract by which individuals agree to pay a certain percentage of their income for a certain period of time in exchange for a down payment normally used to finance education costs. But can be used for other things. An income-participation agreement is a type of loan in which you receive funds and then rem a percentage of your income over a period of time. For example, Align Income Share Funding says you can pay an ISA for home repair, debt consolidation, a medical bill or even plan your wedding. I`m not sure I`m going to make a participation agreement for most of these things. They are traditionally used to invest in what is called human capital, our ability to make money by getting more education. Another name for income participation agreements is the human capital contract.
Align, the first and only provider of GENERAL-purpose ISA, aims to be a better financial partner by providing consumers with fairer, more understandable and personalized access to the capital they need. Payments for this new alternative to consumer liquidity are indexed over a period of time to a small percentage of a consumer`s future income and vary according to changes in customer income. The use of an income-related structure, not a fixed interest rate, better directs the interests of the consumer and the financial partner and offers a simple and flexible option for general consumer spending, such as. B repairs, repairs or medical expenses. Align looks like to better serve the segment of the market, which can not come easily with a few thousand dollars with little warning. Income-participation agreements were first proposed in 1955 by economist Milton Friedman in an essay entitled “The Role of Government in Education.” He wrote: “Professional or vocational training is a form of investment in human capital, exactly by analogy with investments in machinery, buildings or other forms of non-human capital.