Banks or online lending platforms: where should you get a loan from
Sometimes as is very often the case, unforeseen expenses come to haunt us and we are not financially ready for them and due to the ease with which loans can be secured you may find yourself in a situation where you have many options to finance your financing needs.
But according to financial experts, the need of the hour is to go through the financing option depending on the financing need, the repayment term as well as other factors:
In addition, the urgency of funds is also or can be a determining factor in the choice of a source of financing.
Also, it should be noted that a multitude of financial institutions and platforms have emerged recently, they are good to some extent or the other. While some offer competitive pricing, others offer flexibility or more customer-centric product offerings that are actually easy for customers to maintain.
Factors to be assessed
Loan need: Quickly, you need to think carefully about the capital you have on hand, your monthly fixed expenses, your loan needs for future debts. So if you have a huge need for funds, it won’t be a good idea to lend small notes and vice versa. Whereas with a smaller loan you will have to pay EMI at a lower interest rate. Nevertheless, the EMI amount will tend to increase as the loan repayment term gets shorter.
So while you may be able to get a loan, your current needs will not be met.
Urgency of the loan: Here, if you need the cash fast, as it might be during medical demands or around the festivities, you can go for online lending platforms as they use cutting edge technology from the initial loan to the process. final disbursement of the loan amount and this is done in a matter of a few days compared to banks which take a month even in cases where you maintain a salary or a savings account with the bank.
Flexible loan terms regarding loan prepayments: Although this feature is essential to reduce the amount of principal overdue as compared to the loan amount secured. At the same time, with this option available, borrowers can reduce long term interest expenses. So, what is crucial before choosing between the banks and the online lending platform is the flexibility of the terms as well as the interest rate. Also, the customization of loans to meet a varied financial need will also be weighed.
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Article first published: Wednesday, October 24, 2018, 10:59 a.m. [IST]