The fastest and easiest solution in situations where you need money – non-bank loans. However, when choosing an option such as a non-bank loan, there may be considerable confusion, because the offer of non-bank loans is currently very wide and diverse. In order to be able to choose the best solution for you and your wallet, you need to spend time and carefully evaluate both the lender and the offer. How to make a comparison and what to consider when comparing different non-bank loan offers? Read more about it in this article.
What are non-bank loans and how do they work?
Non-bank loans are money loans issued by non-bank lenders. Since people’s needs and financial situations tend to be different, the offers of non-bank lenders are also different – borrowers have access to short-term loans, long-term loans, as well as credit lines.
Today, the most popular types of non-bank loans are consumer loans and credit lines, but non-bank lenders also offer loans such as repair loans, car loans, loans against collateral, etc. Non-bank lenders also offer various solutions that can help repay existing loans, for example credit consolidation and overdraft.
Applying for a non-bank loan is quick and easy – you need to fill out the application on the lender’s website. The application is reviewed and the answer about granting the loan is given in about 15 minutes.
It should be noted that each loan application is carefully evaluated, paying attention to whether the borrower meets all the conditions of the lender.
One of the most important factors that lenders pay attention to is credit history. Then, if a private person’s credit history is positive, it is possible to receive more friendly credit conditions, while if the credit history is negative, the loan may have less friendly conditions or it may be refused.
Compared to banks, non-bank lenders are more accommodating, so if you have bad credit, there are different alternatives depending on the situation, such as a secured loan.
The main criteria when comparing non-bank loans
Interest rates
Each loan consists of the loan principal and loan interest. Regarding interest rates, two indicators should be taken into account: the loan interest rate and the annual interest rate (APR). The interest rate on a loan is the “price” of money and may be subject to market indices, most commonly EURIBOR, or may be fixed. On the other hand, APR is the total cost of the loan, incl. fee for issuing a loan, commission fees, account maintenance costs, fee for a means of payment, etc
When comparing non-bank loans, you should pay attention to the APR, because this rate characterizes the real cost of the loan.
Commission fees and additional expenses
The interest rate is not the only cost you may have to face when using an option such as a non-bank loan – there may also be costs such as commissions; contract conclusion fee; penalties for payment delays, etc
Of course, there are not always such, but when comparing non-bank loans, you should carefully study the terms of the loan, paying particular attention to all additional costs, starting from the issuance of the loan and ending with the last loan payment.
Refund Terms
For non-bank loans not only the amount of the total amount to be refunded differs, but also the repayment process itself. When comparing non-bank loans, you should first study the payment schedule – the monthly payment amount, date and final repayment term. Remember – even though a longer loan repayment term means a lower monthly loan payment, you should expect to pay more in terms of interest.
Early repayment options
The option of early repayment is one of the solutions that can help you save on interest – it means that it is possible to repay the loan before the specified final term. When comparing non-bank loans, it is important to find out whether the selected lender offers such an option and what the costs are when using it. Today, there are also non-bank lenders that offer early repayment as a bonus at no additional cost.
How to evaluate your financial situation
Regardless of whether you choose a bank or a non-bank lender and what type of loan you choose, it is very important to evaluate your financial situation and your options before taking out a loan. Evaluate your income and expenses – will you be able to afford to devote your finances to loan payments every month? Will it not put too much of a burden on your budget? The monthly loan payment should not be more than 20% of the monthly income, as well as all free finances.
The lender also evaluates the client’s ability to pay, therefore, so that the non-bank lender can properly evaluate your ability to repay the loan in good faith, make sure that you have submitted true information about your income and financial situation!
Common mistakes and how to avoid them
The first offer is selected
You should not choose the first loan offer – instead, compare different offers so that you can choose the most beneficial for you and your wallet.
The terms of the contract are not explored
There may be situations where the money is urgently needed and/or the signing of the contract is very tempting, as a result of which the terms of the contract are not studied. Instead, read the credit agreement from A to Z, incl. the fine print so you can avoid unscrupulous lenders and hidden terms, and know what you’re agreeing to and how it will affect your budget.
Needs and financial possibilities are not assessed
You should not choose the largest available amount of loan money – instead, carefully evaluate your needs and financial capabilities in order not to overpay and avoid a situation where you are unable to fulfill your loan obligations in good faith.
By comparing various non-bank loan offers, you will be able to choose the most suitable financial service for your situation and opportunities. Consumer credit, car loans, real estate loans, etc. financial services are offered by almost every non-bank lender. We remind you that any loan is a serious commitment, so be responsible and informed when making a decision to take out a loan!
2023-12-21 12:23:32
#compare #nonbank #loan #offers #important #criteria #Market #news #Latvian #ratings
