Generally, financial matters can be handled with the monthly salary; however, unforeseen circumstances that require financial assistance may arise. In this sense, there are a large number of options to solve these monetary setbacks: banks, microcredit entities, lenders …
In addition to the classic financial system are private lenders. Both have great differences in terms of their rules, conditions and the relationship between both parties. To help you clarify your doubts and choose the most appropriate option, we share some information that differentiates private lenders from banks.
Why do some people go to private lenders?
The answer depends on the special situation of each person. If you have an urgent need for money, you might think that the particular lender may be your best option. It can provide you with money faster which will save you procedural stages. It is true that lenders are not as rigorous with the prerequisites for accessing the loan, but it is important to know the potential risks.
Differences between private lenders and traditional financial system?
Most private money lenders have hidden charges such as processing fees, fluctuating interest, fixed interest rates, closing charges, penalty for premature closing, among others.
It is not that banks do not, but the banking market is better regulated with more restrictions, while the lender market does not reach those levels of security. This occurs because banks are part of a more formal financial system, which is important for the country, and for this reason they must be transparent so as not to damage the credit rating of the country in which they operate or not to harm their depositors.
On the other hand, in the case of private lenders, the collection mechanisms in case of default are of great uncertainty. This means that if you do not cancel one of the loan installments in a bank you can still sleep peacefully, but if you do not pay a lender it could be more complicated. They usually have more persuasive tactics to collect debt. The nature of private lenders in the market is risky and is based on distrust.
In this sense, we can conclude that the formal financial system is more transparent. In addition to this, banks usually give certain benefits to their customers such as the use of credit or debit cards. In contrast, private lenders tend to be more discretionary, being able to modify interest rates on loans without much notice. They also rarely give any benefit to the customer.
Option of microcredits versus private lenders
There is a big difference between both modalities to obtain money loans. We have already said that one of the reasons why people apply for loans from private lenders is because of the speed and that they generally require less requirements. However, Lanchivar can offer you a financial service of equal speed and easy access with the great difference that will give you a security that no particular lender can give you.
This way you can save long lines of bank or feel insecure when negotiating the loan clauses with private lenders. Lanchivar offers to get loans online that in a couple of steps will allow you, quickly and easily, to access the money you need for that exceptional situation you are going through.