Each institution – be it a bank or a loan company – is doing everything to gain the trust of customers today. On the other hand, they are still businesses that want to earn a living. Is the financial market changing and loans becoming more attractive and profitable than a traditional bank cash loan? What are the pros and cons of both solutions if we want to borrow money urgently? What to choose?
For money only to the bank?
That was some time ago, when most loan companies were associated negatively with huge interest, unfair contract terms or ordinary fraud in the form of so-called a pair of banks, such as Amber Gold. Currently, everything is regulated by the anti-usury act and no self-respecting non-banking company offering loans, does not go beyond its law in Poland.
Today, regardless of whether it is a bank or a non-bank lender, each of them is trying to get the attention and trust of the customer. Not only an attractive offer, e.g. payday loans for $ 0, but also honesty and friendly customer service, available even on weekends. Of course, as you don’t know what’s going on, it’s usually about money and it is they that attract customers. The lower the cost of borrowing cash, the greater the demand for such offers.
Although there are still differences between the process of granting cash loans in a banking institution and a loan institution. In the first application for a loan is often a longer way associated with a number of documents that we must provide the bank when submitting the application, in the latter it is most often online communication and a quick decision within 15-30 minutes. What is the difference between payday loans and bank loans?
Pros and cons of a bank cash loan
Customers are mainly divided into supporters of bank offers and quick loans. So what determines greater trust in a bank’s institution? They are mainly stereotypes and circulating myths, based on the saying – “you have it like a bank!”, Which means you can be sure that the bank will never fool you. And it can be very different with this.
Regardless of the type of place where you apply for a loan, you should always carefully read the terms of the offer and the content of the contract, because it may contain additional hidden costs such as commissions for granting a loan or insurance against job loss, which significantly increase the amount of the monthly installment to repayment. We often require such additional insurance from us, the only question is whether they work in practice? If we work on a civil law contract and lose a stable monthly income in this respect, will the compulsory insurance for a bank loan work?
Another disadvantage when borrowing cash from the bank are more stringent requirements, such as creditworthiness or a completely “clean” financial history. Which at the outset excludes from the group of applicants for money e.g. for the purchase of a new car or renovation of an apartment, people with low income, older people aged 65+ or appearing in at least one of the economic information databases (KRD, BIK, ERIF BIG). Therefore, if we care about quick cash, and in the past we have had a delay in paying e.g. a telephone bill, we will not get a bank loan.
And the advantages? In most bank loan offers, these are still low fees around loans and an attractive interest rate of 5-10%, APRC from around 10% and with a commission of 5-10%. Which, for example, a cash loan of $ 20,000, generates costs of approximately $ 500-550. It is comparatively much cheaper than in the case of non-bank installment loans.
Advantages and disadvantages of payday loans and non-bank loans
The aforementioned disadvantages of quick non-bank loans are, unfortunately, still higher interest rates than at the bank. Lenders, by granting cash in the short term to people with lower incomes or already indebted, take a higher risk in the event of a lack of repayment than banks. This usually results in higher borrowing costs than bank loans, which generally avoids such clients.
The advantages of payday loans include primarily:
- quick decision in granting cash, conveniently online,
- first loan for free,
- the possibility of obtaining a loan, despite the presence in economic information databases,
- low income or even lack thereof,
- granting loans to the elderly above 70 years of age,
- no compulsory insurance.
To sum up, thanks to having much more cash in the deposit than private lenders, banks have an advantage in the form of lower interest rates on borrowed cash. Unless you intend to borrow a small amount for a short period of time, without unnecessary and complicated formalities, then non-bank payday loans for $ 0 is the best available option on the current financial market.