If you were to get a loan, where would you go to apply for one? There are several types of lenders, each with offers and features that may be convenient. How do you know which ones are suitable for you?
The following is a list of lenders you may approach, as well as a list of advantages and disadvantages to transacting with them.
One of the lenders you can get a loan from is your bank. Banks offer several other services than just enabling you to keep your money. They also provide loans and other similar services like credit cards and lines of credit. The following are the pros and cons when applying for a loan at your bank.
One of the advantages of getting a loan in your bank is that they already know you, and the approval process might be more straightforward. Since they have your information, you don’t have to gather certain required documents.
Another advantage is that bank loans offer low and fixed interest rates, although they vary from one borrower to another. One thing that could affect your interest rate is your credit history or credit score. Those with higher credit scores and good credit history can enjoy several perks, such as low-interest rates.
Perhaps one of the pros that entice several people to apply for bank loans is that they are secure and easy to reach. Since banks are enormous financial institutions, they are typically safe to transact with. You may also reach them anytime within working hours should you have any concerns.
A disadvantage you might experience with banks as your lender is that it might take a long while to process your loan. This covers the time you applied for the loan to when you received the money or the asset.
For example, for personal loans, the process may take about seven business days, but it may stretch up to several business days, depending on the establishment. Assets may even take even more time.
Another disadvantage some individuals may encounter is that banks provide lesser deals to individuals with bad credit. Such individuals refer to anyone with low credit scores or those who have several debts. The bank is less likely to lend money to such individuals as they don’t want to risk their money on someone who might not pay them back.
Another traditional lender is a credit union. This non-profit institution serves as a financial cooperative where members contribute their money and can, in turn, avail any services that the credit union offers. Among these services are some loans.
An advantage of getting loans from credit unions is getting lower interest rates than other lenders. It also offers little to no starting fees, which helps your savings. Unlike banks, credit unions provide services for their members, who pool their money for them to operate.
Another advantage is that you’re more likely to qualify for a loan in credit unions than banks. There are fewer restrictions for lenders, making them able to get the service they need. Credit unions are also known to be friendly and approachable. You can speak with them whenever you have trouble regarding your credit.
The primary condition with individuals wanting to get loans or even any service from credit unions is to be a member. And to even be a member, you have to be affiliated with whatever common ground these members have.
Credit unions are formed for members with a similar background, such as living in the same area, having the same profession, or other types of distinction. You still need to look for one where you can fit in. And, of course, if you’re a member, you need to keep paying the required deposit, which might be expensive.
Another disadvantage with credit unions is that they have fewer services and products. Since they tend to be exclusive, there aren’t many branches, limiting the only places you can transact with them. They also may not have tech as good as banks, so their operations tend to be more manual.
Online Lending Companies
Lending companies are institutions that specialize in loans. The services may vary from one company or another. Online lending companies are the big ones in the field, with services extending or exclusive to internet usage.
The main advantage to online lenders is that you can access them online. This quickly speaks of convenience, especially to those who don’t have the time to go elsewhere. With just a few clicks, you can apply, set up an account, and wait for approval on the site or in your emails.
Another advantage is that there are fewer restrictions for qualification. Online lenders won’t just look at your credit score; they will also look into other factors, such as your proof of income. They also make fast transactions. Some lenders like CreditNinja can give you your borrowed money in a day or less.
One of the cons to the several online lenders out there is that some of them are potentially fraudulent and could rob you of your money. You need to tread carefully on the internet when looking for a suitable lender.
One more disadvantage is that the interest rates may be higher than the other lenders’. This is usually the case with borrowers who have bad credit or applied for short-term loans. You need to find a way to pay off the high interest within the deadline.
To Sum it Up
If you want to get a loan and don’t know which lender to go to, the key is selecting the one that benefits you. You need to list the pros and cons of what could be the case if you were to transact with them. There’s no perfect lender; however, going with the one that suits what you need the most can ease your financial burdens in the long run.