Alternative financial services (AFS) are financial services

Financial services

Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...

 provided outside traditional banking institutions, on which many low-income individuals

Poverty

Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...

 depend. In developing countries, these services often take the form of microfinance

Microfinance

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....

. In developed countries, the services may be similar to those provided by banks, and include payday loan

Payday loan

A payday loan is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card...

s, rent-to-own agreements, pawnshops

Pawnbroker

A pawnbroker is an individual or business that offers secured loans to people, with items of personal property used as collateral...

, refund anticipation loan

Refund Anticipation Loan

A refund anticipation loan is a short-term consumer loan secured by a taxpayer’s expected tax refund, and designed to offer customers quicker access to funds than waiting for their tax refund...

s, some subprime mortgage loans and car title loans, and non-bank check cashing, money order

Money order

A money order is a payment order for a pre-specified amount of money. Because it is required that the funds be prepaid for the amount shown on it, it is a more trusted method of payment than a cheque.-History of money orders:...

s, and money transfers. It also includes traditional moneylending by door-to-door collection, sometimes in the form of "loan shark

Loan shark

A loan shark is a person or body that offers unsecured loans at illegally high interest rates to individuals, often enforcing repayment by blackmail or threats of violence....

"ing. Alternative financial services are typically provided by non-bank financial institution

Non-bank financial institution

A non-bank financial institution is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market...

s, although person-to-person lending

Person-to-person lending

Person-to-person lending is a certain breed of financial transaction which occurs directly between individuals or "peers" without the intermediation of...

 and crowd funding

Crowd funding

Crowd funding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations...

 also play a role.

Alternative financial services in the United States, for example via payday loans in the United States

Payday loans in the United States

Payday loans in the United States are a growing industry. Regulation of lending institutions is handled primarily by individual states, and the industry exists atop an active and shifting legal landscape. Lenders lobby to enable payday lending practices, while opponents of the industry lobby to...

, are more extensive than in some other countries, because the major banks in the U.S. are less willing to lend to people with marginal credit rating

Credit rating

A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by a credit rating agency of the debt issuers likelihood of default. Credit ratings are...

s than their counterparts in many other countries.

In the United Kingdom, alternative financial services include payday loans

Payday loans in the United Kingdom

Payday loans in the United Kingdom are a rapidly growing industry, with four times as many people using such loans in 2009 compared to 2006 - in 2009 1.2 million people took out 4.1 million loans, with total lending amounting to £1.2 billion. The average loan size is around £300, and two-thirds of...

 and moneylending, the latter termed "Home Collected Credit" or "home credit". Organizations such as Debt on our Doorstep

Debt on our Doorstep

Debt on our Doorstep is a UK-based campaign against extortionate credit lending and for fair financial services. The campaign, founded in 1999, comprises not-for-profit and non-governmental organisations including Oxfam and the National Housing Federation...

campaign for improved regulation.