In today’s date, getting a personalised loan holds immense importance for let’s say, buying a house or a car. While both banks and money lenders are reliable and trusted sources of finance, they help you gather the funds that you need to purchase your preferred assets. However, each one of them has a varied number of pros and cons.
In much broader terms, licensed money lenders many times offer a wider variety of credit options to choose from and are also sometimes merciful and compassionate towards borrowers with bad debts and credit. Banks, however, aren’t that compassionate and have to be professional and equal towards all types and classes of borrowers. Banks usually have fewer options and many strict criteria in terms of leasing options.
Pros, Cons, and Details: Banks
One might find it easier to reach out to a local bank to help them with the entire procedure of obtaining a loan if they have a prior history or connection with that bank. Usually, people ask what is a personal loan and how it is different from other loans. A personal loan is a loan based on installments wherein borrowed funds can use for any purpose.
Banks are always preferred over licensed money lenders because they often have to offer special discounts or perks for existing and regular customers. Often, they also might offer special and exclusive loan and credit options designed specifically for certain segments of banking such as institutional investors, self-employed persons, entrepreneurs, etc.
Furthermore, banks are always seen trying to promote their other financial services and products to provide a wholesome experience to the customers. This not only ensures customer satisfaction but also is a huge source of revenue for such financial institutions. These include offerings such as exclusive accounts for customers like savings and checking accounts, debit or credit cards, and several other, free remittance facilities, and many more.
Yet another crucial factor why banks accept or reject applications for loans is based on your financial profile. Many times, people with a nonfinancial background are offered harsh and higher interest rates. As mentioned earlier, existing customers are offered discounted prices as compared to new customers, which might seem biased on the face of it. Many times, people tend to look over the cons of obtaining loans from a bank. One of the major drawbacks of sourcing your loans via banks is the fact that banks are usually comparatively stricter and more professional. As they are subject to a standard of operations, banks need to comply and adhere to laws. This often forces the argument that it is harder to obtain a loan if you have lower or negligible creditworthiness. Banks also take longer to completely close on a loan sanction as they are required to scrutinize thoroughly.
Pros, Cons, and Details: Money Lenders
Yet again, the question arises that what is a personal loan and how do money lenders differ from banks. Over the years, licensed moneylenders have received a progressively larger demand for authorized credit and loans. One of the reasons this is so is because licensed moneylenders are flexible, timely, and rapid in closing their client’s loans, unlike banks.
Since these money lenders are not only authorized and legitimate but also comparatively lenient than most banks, they have given preference this that area. These money lenders usually tend to customize and offer unique and exclusive credit recommendations. These are often as per the convenience of the customers, their financial stability, and income.
Several money lenders also specialize in the mortgage sector and provide mortgage-related services and credit. Some might refute the above mentioned and say that often money lenders are seen being involved in money laundering and theft. The level of trust and worthiness is often not enough with customers in the case of money lenders. Moneylenders also often remit their loans to third parties after the entire procedure has been closed and completed. This means that the customers would not have control over who they are eventually answerable to once the matter is closed.
Although there is no doubting, the fact that money lenders provide clients with more lending expertise and training than banking institutions do, they are preferred as they offer a variety of credit options as per the wants of the customers. Better credit guidance and advice is yet another feature in which money lenders specialize in. Clients are also in a better place to negotiate for their credit with money lenders. This is, however, not true for large banking institutions. Moneylenders often carry out their activities from a central office, and hence it might not be convenient for customers as most banks have branches close to their customers.
Moneylenders and banks offer their own set of deliverables, which are relative to different customer groups and come with their pros and cons. To make sure that you obtain credit from the best source, ensure that you are well informed about each parameter. Asking around and enquiring from different lenders and banks will only ease the process. It’ll help in comparing the rates, amounts, and explicit costs for each. Learn more about personal loan application here.