In the current world, there are money lenders who are licensed by the registry of money lenders. The registry requires money lenders who are abiding by the money lenders act and rules. In fact, the fees charged, interests rates a lender can charge and the lending amounts limit are some of the things which are determine by the registry.
The licensed money lenders do the same job as banks who grant loans to individuals who might be having genuine financial needs. If there is late payment, the lender is not supposed to harass the borrower. Instead, he or she should simply send a reminder notice. The legal methods which are used in banks are also used by the money lender.
Apart from collection of money and debts, licensed money lenders and banks work in completely different ways. Some of the differences include: forgiveness of a credit assessment, high interest rates, the speed and they are focused on smaller personal loans. The following is a description of each of the differences:
1. Money lenders focus on smaller loans
Legal or licensed money lender focus on small amount of loans. In fact, when you earn $30,000 income, the money lenders maximum gives a loan of around $10,000. The legal lending restriction is that it should only offer a maximum of four times the money which a person earns, if your annual income is $30,000 or more but less than $120,000. However, most of the borrowers want a small payday loans. Therefore, money lenders might not run the risk of loaning a home renovation whose cost is $20,000.
When you want the money for paying rent or fixing a car, the ideal option is to borrow from money lenders. But, housing loans and renovation costs money lenders is not the solution.
2. The speed
When you have proper documents, you will be able top get the loan in 30 minutes or less for money lenders. The entire process up to the time you will get the cash can take a maximum of 45 minutes. When creditors have a credit background check, the borrowers will be able to get approved in less time.
Unlike banks, money lenders offer a fast and viable solution which you have. Moreover, it assists you when you need the money right away.
3. The interest rates are higher
Money lenders can only disclose there rates face to face. This is because they charge high interest rates as compared to banks. Since the interest rates are higher, it can be even cheaper to get the money from a credit card rather than go for the money lender. Therefore, it is a good idea to get approved for a credit card from the bank rather than walk into a money lender’s institution.
4. Easier approval. It has a forgiving credit card assessment
It is hard to fix within a short time if your credit card is falling or you have missed payments. The bank has an instant denial when there is a poor credit rating. Money lenders don’t focus so much on credit. In fact, they are more forgiving. Nevertheless, some borrowers do a background check. When they find that you have outstanding loans elsewhere, they deny you the payment.
With a poor credit rating, most of the lenders will not deny you a loan which you want to take out to the money lending institution. Hence, money lenders are a good option especially for those people who don’t have the highest credit rating.