In the modern financial services market, demand is growing, which means that offers appear more often. To see the principal differences in a large number of similar banking products without professional knowledge or expert advice is increasingly difficult. We will help you understand! Read our tips.
Not every applicant for borrowed funds can use all the opportunities and advantages of bank lending. In some cases, credit institutions simply do not approve the issuance of the required amount due to the lack of official employment and income, the applicant’s incompatibility with the age, registration and other mandatory requirements. There are also other situations in which the lack of the possibility of obtaining such loans is due to a damaged credit history.
If such a potential borrower needs money, are the only acceptable option. This concept most often combines numerous types of relevant agreements that are concluded in the non-banking sphere. They have their own pros and cons, as well as calculated for a very specific audience of potential debtors, for which for certain reasons, the purchase of bank credit products is not available.
Advantages of short-term loans and borrowings
Despite the many negative comments left on non-bank lending, short-term loans and borrowings have certain advantages that should be used. In particular, the main advantages are:
– a minimum package of documents necessary to obtain borrowed funds (most often the borrower is required to show a passport);
– a simplified procedure for considering a filed application, which does not include verification of credit history, confirmation of receipt of permanent income in a certain amount, evidence of official employment;
– the shortest period of time between the circulation of the loan and its receipt, compared with which the standard three working days for consideration of the application in the bank are presented for an indefinitely long period.
Shortcomings of short-term loans and borrowings
The noted advantages and features of non-bank lending create an increased level of risk for such lenders, which are usually microfinance institutions. If in the sphere of bank lending a strict balance is observed between the risks of the credit institution and the terms of the concluded agreement, in this case the lender simply compensates for its possible and actual losses at the expense of the borrowers.