Where Can I Get a Loan?
- Banks and credit unions, not surprisingly, are the largest lenders in the country. Banks and credit unions offer loans for most situations, covering needs such as car loans, mortgages and unsecured loans.
A lesser-known option offered by most banks and credit unions is deposit-secured loans. If a customer has an account at a financial institution, the lender can use the account as security for a loan.
Why would someone obtain a loan if he already has the necessary funds in the bank? Often this is done as a financial strategy. It can be an effective if the borrower needs to rebuild his credit or wants to offset his interest rate. For example, clients who have deposit accounts earning high rates sometimes choose to obtain loans against them rather than withdraw the funds. They have access to the money they need while paying a low rate on the loan, but earning a higher rate on the deposit account. - As an alternative to traditional banks and credit unions, borrowers may consider obtaining loans online. Websites such as E-loan.com allow consumers to complete one loan application, which is presented to several lenders. The lenders then make proposals to the borrower in order to earn his business.
Online lenders are very convenient and fast, and have competitive rates. Borrowers who are short on time benefit from completing the loan process online. They are able to receive several proposals and pick the lender that offers the best deal without ever leaving home. - Payday lenders are available for those who have sub-par credit or need quick cash for short-term purchases. Generally, there is no credit check performed and the loans are paid back on the borrower's next payday. Consumers should be extremely careful when selecting this type of loan, however. Payday lenders are notorious for charging exorbitant interest rates. In many cases, the interest charged exceeds the amount that is originally borrowed, resulting in a cycle of debt.
- Better options for short-term financial needs are credit cards. Credit cards allow borrowers to borrow funds and repay them over time. Credit cards are relatively easy to obtain and can offer many perks or rewards for use. Additionally, rates are very competitive, making them an affordable alternative to payday lenders.
- For large purchases, such as cars and homes, borrowers often turn to banks or credit unions. These types of loans can be obtained from other sources, however.
Car lots generally work with several lending partners, allowing them the ability to present only the most competitive offers to clients. This can be an excellent option for those who do not have time to shop rates or who have credit issues.
Mortgages, more complicated types of loans, can come from banks or credit unions as well. They can also come from mortgage brokers, however. Brokers shop rates and loan terms on the borrower's behalf. Like car lots, brokers work with several lending partners and then present the best offers to their clients.
Loans can come from many different sources. Before committing to a loan contract, however, borrowers should consider their options. By shopping different types of lenders, borrowers can be sure they are being offered the best deals.
