Bank loans have served many people around the world. Despite the high interest and strictness of banks, many borrowers still rely on them for financial support. Banks typically respond with more products and services to offer. However, bank loans are not meant for everyone. If you need money fast, a bank loan is not reliable. Instead, you should try seeking out online lenders.
These are the 3 reasons why you should avoid bank loans:
Bank Loans Have High Interest
Typical bank loans have high interests when compared to online quick cash lenders. This is due to the fact that banks are always managing their risks. If you need a big loan, for example, the bank will assess your interest based on your lifestyle, credit rating, and income sources. Commonly, bank-issued secured loans have variable interest that’s about five times higher than the regular personal loan. To deal with this, banks have launched low-interest unsecured loans favored by many borrowers. Still, bank-issued unsecured loans have slightly higher rates.
The Bank Has Complete Power
Once you’ve applied for a bank loan, the bank will have full control over the loan’s specifics. The bank is officially sanctioned to change rates accordingly. This can be disadvantageous for borrowers who are operating on a tight financial rein – yet business is still business. The bank can also dictate the repayment terms and make alterations based on global economic forecasts. Online lenders have different systems. While they can still change interest, online lenders have greater consideration. They usually warn borrowers about an incoming change. Other types of lenders such as local community lenders don’t change rates because of competition and empathy for borrowers.
Banks are Relentless in Collections
Next to vicious payday lenders, banks are relentless in pursuing what borrowers owe. They may resort to stressful legal methods or send collection agents every day. While banks may accept your reason, they will slap penalties against your account. This will leave you trapped in a greater debt. Not all banks operate like this, but they will do everything to get what is due.
Even though you must avoid bank loans, you should know that not all of them are bad. Some bank loans are usually beneficial if you already have a desirable credit status. In that case, the bank deduces that you’re a good payer. The bank now becomes your ‘friend’ and will start offering loans with wonderful terms. So, work on your credit rating first!