Tuesday, July 31, 2012

Specific Features of Loan Institutions

The last ones are the most appealing from the consumer's point of view, as they offer quite nonstandard terms, compared to the traditional banks. The differences between these institutions are enormous. Generally speaking, the following specific features of the services they offer can be sorted out in the following way:

Amount of the loan

Depending on what amount of money you need to borrow, you should think of the choice of a loan institution. Traditional banks offer big amount, while smaller companies are limited to a small size of the loan portfolio. It seldom exceeds $300 000 in total for all the borrowers.

Terms of lending

Banks themselves are quite a steady business. They plan their activities for many years ahead. Long-term loans for up to 5 years (including physical persons) are quite a regular practice for such institutions. Small loan companies offer much shorter terms of lending in exchange for expeditious processing of your application. Let's study this question in greater detail.

Terms of processing applications

Banks are famous for their cautiousness in regards to a big quantity of official papers a borrower has to collect. These include a statement of earnings and a property certificate (not for the purpose of the mortgage.) And we do not even mention some cases when a borrower has to look for guarantors or complete the formalities for a mortgage. The last task may take a whole week. In this case one should apply to a lower rank institution.

Companies, working in the field of consumer micro credit, bring forward the minimal terms of application processing as their major advantage. The decisions are taken practically in your presence that is an unquestionable advantage of addressing to such institutions.

Interest rate

They say a consumer is always pursuing a low service fee. As for a charge in the given context, it suggests an interest rate that is a consumer's fee for using a loan. Here we see basic conformity to the previous categories - the longer the possible terms are, the bigger the credit amount is, the longer your application is being processed and the lower interest rate you get. As for the positive decision, it's usually taken there, where you are least checked. In exchange you are only asked to provide your passport/ID information.

The choice of credit products

Different people search for different credit products. If you apply to a regular bank, you will be offered a wide range of services, depending on your needs. 
Smaller companies practise much smaller assortment of credit services. As a rule they are:

- short-term loans for vacations 
- make loans to people until they get monthly payment 
- loans for urgent needs

Before you sign a credit contract, be sure you have studied not only all its terms but also the terms that competitors offer. Get acquainted with responses about the given loan institution from your acquaintances or the Internet. If you don't want to get into debtors' prison and acquire a low credit score forever, think twice before taking a consumer loan.

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