Many people deciding to take out a loan, many are wondering whether to use a banking institution when taking it or whether to opt for non-bank institutions, which today are very large and tempt us with extremely favorable conditions.
When making such decisions, it is worth considering all the pros and cons of each of these two solutions.
The terms loan and credit are often used interchangeably with each other, which is a big mistake. There are many differences between them. Both in the case of loans and credits, we deal with borrowing money. The loan may be granted by non-bank companies or by a private individual. Credit is the domain of banks and cooperative savings and credit unions.
Comparison of installment loans
Quick, non-bank loans in any form, whether short-term or long-term, are more expensive than bank loans. Installment loans are loans that can be taken from banks and non-bank companies.
When choosing an offer from a bank or from non-bank institutions, we have the option of borrowing the amount of several thousand dollars with the option of repayment within 3 months to even 5 years if not longer. Depending on the product we choose, we give the commitment in equal monthly installments.
The principle of non-bank installment loans and bank loans is very simple. For online offers, simply complete the application, send the required documents to the lender, and verify your identity using a bank transfer or special application. If our loan application is successful, the money will be automatically transferred to our account. In the case of bank loans, the loan is taken at the bank and may take a little longer, it all depends on the amount and whether we meet the conditions set by the bank.
Non-bank installment loan
Recently, companies offering online installment loans are increasing day by day. The decision to take such a loan will be a decision for a few months, maybe even years, so you should wisely choose the best offer. An installment loan is a product for those who need a larger injection of cash to renovate or replace broken equipment or a car.
A non-bank installment loan can be up to several thousand dollars in the case of loan companies, and more in the case of parabanks and private investors. Installment loans can most often be drawn in the amount of USD 100 to 25,000 thousand with a repayment period of up to 48 months. Usually the repayment period is set individually, just like other conditions of non-bank installment loans. Most products are available online without leaving your home.
Installment non-bank loans are available online, by phone and landline depending on how the lender works. Installment loans are granted to persons with income from work or another legal source and can confirm the amount of this income. A loan application can be submitted online, so all formalities are kept to a minimum. And the loan amount we are interested in will be transferred to our bank account in a short time.
Bank installment loan
A loan is a financial product that is reserved only for banks. This is a traditional and well-known form of financing for larger enterprises. It is these institutions that specialize in granting them, because issues related to the loan agreement are regulated in the Banking Law.
Banks grant loans in the amount of USD 1,000 up to USD 200,000 for a long period. It all depends on the type of loan, but the longest can reach even 50 years. The bank does not grant a cash loan, but only transfers the amount specified in the contract to the client’s account. The funds transferred to the borrower under the loan agreement must be earmarked for a specific purpose (eg investment purpose, consolidation of other loans or purchase of real estate), and the lender has the right to check how the borrowed funds are spent.
The loan agreement, which should be made in writing, always specifies the date of return of the capital raised together with interest in a strictly defined installment form. The loan agreement is payable, and the loan price is fees, commissions and interest. The bank grants credit only to people who have a contract of employment, adequate creditworthiness, creditworthiness – that is, the history of repayment of obligations you have incurred, have an ID card and income certificate.
The process of verifying a customer who wants to take out a loan from a bank is longer. Banks and credit unions have to carry out the painstaking process of verifying the creditworthiness and creditworthiness of the client, when granting loans, which unfortunately can take up to several weeks and will require the potential borrower to submit many documents for the loan application.