When it comes to borrowing money, the first place most people go is the bank. However, without the proper credit or financial history, it can be hard to be approved for a loan from the bank. Luckily, there are other options. Non-bank lenders can provide the necessary funding someone needs without the hassle of the bank; while there are tradeoffs, many people find non-bank lenders to be a far better option in the end.
1. Competitive rates.
Many non-bank lenders offer rates that are just as competitive as those at the bank, and come sometimes actually be a cheaper option in the long run. The only way to know for sure is to evaluate your repayment period and the interest rate. Doing a bit of simple math can help you determine what the best option is for you.
2. Lower barriers to entry.
Banks are known for being very difficult to get a loan from. However, non-bank lenders often have less strict criteria for qualifying for a loan. If your credit isn’t as great as it could be or you’ve been declined a loan in the past, going to a non-bank lender may be the better option for you until you’ve built up more credit.
3. Customer service.
Banks tend to serve thousands of customers at any given time. However, non-bank lenders can provide a more customized, personalized experience. They also offer more niche types of loans to suit your specific needs. A bank may only be able to provide loans under certain circumstances, but a non-bank lender can provide you with funding for a more obscure business proposition or type of home.
Of course, banks are more secure in times of economic downfall. They have more regulations and, in most cases, government backing that protects them during turbulent periods. However, if you have no way of receiving a loan from the bank, going through a third-party lender may be your best option. Take the time to evaluate your specific needs and then determine whether a bank or a non bank lender is the proper choice to fit your situation.
Determining this ahead of time and discussing your vision for the loan with the lender can help you find the right product and time line to pay it back without putting you in a financial bind.