There are different kinds of loans as well as lenders. To get the right kind of loan, you must pick your lender judiciously.
Determining the type of lender that will better suit your needs will depend on your situation, as well as on the kind of loan you require. For instance, you can’t approach a bank for a payday loan. For this type of loan, your choice is limited between a licensed moneylender and a loan shark—and the latter actually should never be an option because they are not licensed. So if you need a payday loan, you should always approach a lender who’s licensed.
Here are some common loan scenarios and the kind of lender most suitable for them.
If your credit report is great, you should first approach your bank for a loan. Compared to credit card companies and money lenders, banks charge a lower interest rate.
However, it would be best if you talk to some other banks as well beside the bank in which you’ve your savings or current account. That will ensure that you get the best possible deal.
A good credit report improves your chances of getting a loan from a bank at a decent interest rate. However, banks take their own sweet time to process loans. You can request them for a fast approval of your loan application as much as you want, but if their time frame for approving an application is 7 business days, then that’s the time they will take in your case as well.
Credit card companies usually take a slightly less time than banks, but not a whole lot less. Therefore, if you need a personal loan immediately or within a day, you should approach money lenders who are licensed. As these lenders don’t carry exhaustive background check, they can process loans quickly, sometimes on the same day itself. However, remember this convenience comes at a price. Money lenders charge a higher interest rate than banks and credit card companies.
Here you have two options. You should either go with a bank or a credit card company.
If you are thinking of a debt consolidation loan, it is likely that you need to borrow a considerable amount of money. Money lenders usually don’t lend vast sums of money. And even if you find a licensed moneylender who is ready to lend you the required amount, he will charge you a high-interest rate. However, the interest rate in all probability will be more than what you pay on your current outstanding loans, negating the advantage of debt consolidation.
In the event of a mortgage or car loan, you can only approach banks and financial institutions. Irrespective of the kind of loan you need, it is better to talk with several loan providers because interest rates often vary from one to another