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Lenders

How to Find the Right Lender for You?

 

The appearance of online lending services has given individuals a lot more choice when it comes to deciding how to borrow money. However, even these online-based loans have disadvantages that borrowers must take into account, such as higher interest rates. Generally speaking, there is no perfect lender and each individual will have to know how to determine which is the best one for him. This having been said, there are hundreds of online lenders to choose from, multiple banks, as well as various other types of private lenders that operate throughout the country. Having too many choices can create confusion, especially for individuals who are not used to taking out loans.

Luckily, most lenders can be placed into one of several categories, based on how they operate and how their services can affect the borrower’s credit rating. Here is what you need to know:

Online vs. Offline Financial Services

There are two main choices when it comes to choosing a lender: internet lenders (or online lending platforms) and traditional, physical lenders (banks, for example).Each of operates differently and decided to borrow money from one or another will have a considerable impact on your credit file.

Traditional lenders are banks, private lenders and credit unions, among others. Borrowing money from these will be marked on your credit file and missing repayments will directly affect your credit rating. Physical lenders tend to offer a larger number of types of credit than online ones; however, borrowing money from them can take considerably more. This is usually because borrowers need to submit several documents that must then be analysed by the lenders. The latter also performs credit rating checks to decide whether or not the borrower should receive a certain type of credit.

On the other hand, online lending services are less restrictive than physical ones. They usually do not perform credit rating checks and do not report the loans that they give out to any of the main national credit rating agencies. This means that borrowing money from them will not affect an individual’s credit score or be marked on his permanent financial records. It is also worth mentioning that most of these companies take less than 24 hours to go through an individual’s application and transfer the loan money. All of this, however, comes at a cost. Online lending services have higher interest rates than physical ones.

Banks vs. Other Private Lenders

As far as choosing between banks and other private physical lenders is concerned, it is more a matter of preference than anything else. All banks operate more or less in the same way, which means that borrowers know what to expect when getting a loan. However, private lenders such as credit unions, private lending companies, pawnshops, and credit card companies have much more freedom in terms of how they develop their offers and what types of charges they attach to them. There is often more risk involved in borrowing from private lenders because they tend to introduce hidden charges or clauses that increase the interest rates in certain scenarios.

Security Concerns

All banks are safe, for the most part, however, when it comes to online lending services and private lenders, all security concerns are related to whether or not the lenders are authorised (this can be established through a simple web search), and if the connection is secure. The security of the website’s connection can be seen by looking at its address. If it starts with “HTTPS”, then it is safe to use. As for other private lenders such as pawnshops and credit unions, borrowers must pay special attention to the terms that they agree to.

By Clive

Ever since I graduated from university and have started repaying my student loans I’ve tried to understand how some people seem to have little trouble managing their personal finances while others are struggling. Over the years, I’ve interviewed countless entrepreneurs and have read every personal finance book that I could find. I’ve tested a large number of strategies and have discarded the inefficient ones. Now, I want to share the ones that remained. I’ve learned a great deal regarding how anyone can manage his personal finances to live a happy and care-free life. These are things that everyone should know.

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