Many of us, enter the credit market with zero knowledge, or on the basis of bits we hear from here and there, and we lend money or even apply for a loan. The thing here is that it leads one to ineffective decision-making, which often times in the case of the credit market leads us to a situation of the debt trap. In this state, the amount to be received as a loan is negligible in comparison to the amount you need to repay, that is you have a high amount to be repaid as interest. As we all are familiar with the concept of interest, it increases with time. Therefore, it becomes essential for a person, even a potential loanee, to understand how this system works. Now talking about loans there are numerous sources of loans– banks, online lenders, and more, in this article, we will be seeing a comparative view of all the possible different sources of money lending.
Banks
The most common sources to arrange funds in today’s era is the banks, the reason being they provide safe and secure funds, and are backed by the authorities. Though banks demand a lot of documents to be produced, and the process of loan application is a bit tiresome, the funds provided are often by legal methods, and frauds can be claimed, from both sides, the lenders and the loanee both, can knock the gates of the concerned authorities. Bank loans are often the resort of loans for bad credit reason being, they can’t deny you the loan services, provided you fulfil their criteria, and the criteria are decided under the jurisdiction of the authorities. The rate of interest, which plays the major role in deciding the source of the loan, is also pre-decided under the jurisdiction of the authorities, so no overcharges of interest, and the interest is unbiased for all.
Online Lenders, Direct Lenders
The only drawback in the case of banks is certain criteria need to be fulfilled, and then only access to funds is allowed, which usually takes fifteen to twenty working days. Though it is the best possible option in case of normal circumstances, the financial emergency or crisis to be more precise is not pre-planned, some of them are so sudden that they tend to knock the financial planning of a person down to the dirt, no matter how far visioned you are, life is smarter than you. So in such cases, urgent requirements of funds need to be fulfilled which could not be done via banks, there comes the knight in shining armour, the unorganized loan market, aka the direct lenders and the online lenders, the last resort of loans for bad credit.
The interest rate offered by them are more in comparison to that of the banks but they provide you instant funds with no hassle. Though this sector is also regulated by the authorities to an extent, still it is not as safe as bank loans. One can avail of such loans but need to be smart, and equipped with their tricks.
Checking the previous client details, and involving legal paper so that the interest is fixed are some of the measures one can take while applying for a loan in the unorganized sector. This is the reason why it is often said that financial literacy is a must, one should know how to use the money he earned with blood and sweat.
