A non-bank loan can be more profitable than a bank loan

At the same time, banks and non-bank lenders have the necessary resources and skills to offer borrowers less favorable terms through thoughtful marketing. Fortunately, there is an effective solution – credit comparison. The problem is that not everyone who wants to get a loan is aware of such tools and options, and as a result they do not use the resources available to get the best conditions. to choose

In this context, it should be emphasized that the knowledge of the majority of our citizens on the non-bank loan market is very old. They have remained around a decade ago, when non-bank lenders operated in an almost unregulated environment where it was possible to offer high interest rates and other unfavorable terms. However, in the last ten years, the situation has changed a lot – now the market is strictly regulated, the maximum allowed interest rates and other restrictions have been determined. At the same time, the non-bank loan market has been competitive and fighting for customers, which, unfortunately, is almost non-existent in the banking sector.

Today, the non-bank lending market can offer almost the same types of popular loans to individuals as banks – consumer, car and mortgage loans. Since there is still competition for customers in the non-bank sector, loan applications from these lenders are processed much faster than from banks. In addition, non-bank lenders often deal with some less formal conditions, for example, the requirement that they have to work at one job for at least six months to get a loan get a mortgage from a bank. It should also be noted that there are customers who do not even try to apply to banks for a loan, because they believe that the application review process there is too slow and bureaucratic. Do not forget also that there is a category of borrowers whose salaries are paid in a form that does not allow them to get a loan from the bank easily. As a result, interest rates and credit terms from non-bank lenders are often competitive compared to bank offers, and can be compared easily and quickly, unlike bank offers.

Currently, the question of the need to lift restrictions on credit ads is being actively discussed in Latvia. It should be noted that the purpose of these discussions is the number of loans granted to support the economy and promote growth. However, individuals should note that this may restore the situation where financial institutions with stronger marketing teams and larger marketing budgets are able to provide more loans, rather than those with more favorable interest rates and terms for customers. As restrictions on credit advertising are likely to be lifted, I would like to remind customers that this does not cancel the need to carefully and carefully compare interest rates, numbers and other terms of their loans which was offered. It is recommended to get at least several financing offers from different credit institutions before making a final decision. In other words, impulse purchases are not only in supermarkets – they are also available in the loan world and should not be involved.

Aleksandrs Shmachenko, chairman of the board of SIA “Elizings”.