3 Pros and Cons to know About Borrowing from a Direct Lender
A personal loan is a quick source of money and does not come with high interests. These loans are now popular among customers, and the demand continues to increase. Some personal loan will also allow you to access money without putting up collateral such as your car.
Additionally, the lender allows you to make partial payments. Just like conventional banks, you can find direct lenders at online banks such as the invoice factoring. Here are three pros and cons to know about borrowing from a direct lender.
#1.Everything is under one Roof
Private lenders will often take care of the entire loan process. When you select a company, it will accept your application and supply the funds. As a result, this speeds up the process, and you can have your money within a short time. Most direct lenders ensure that their approval is instant and offer same-day wire transfer of your funds.
Some lenders make money by selling your data to third parties who then call you with more loan offers. Most direct lenders respect your privacy and will keep your personal information safe. Make sure that you ask questions about the privacy policies of your private lender before applying for a loan.
A private lender offers an excellent way of consolidating existing debt. This way you can lower the amount you pay monthly and the interest rate. The average interest rate of a personal loan is 9.7%, while credit cards charge about 13.7%. You can transfer your entire debt to a personal loan to reduce the amount that you will eventually pay. You will also reduce the number of monthly payments that you need to keep track of thus making your work easier.
#1. Difficult to compare rates
Since direct lenders are only one company offering one loan service, you do not have much say in their terms and conditions. You will have to do a lot of research to determine which lender offers the best rates. Most matchers will help you with this analysis, but private lenders work through a physical storefront. Doing this kind of legwork is tedious, especially since you are applying for a short-term loan.
#2. Repayment Period
Most private lenders offer short repayment periods ranging from two to 18 months. If you combine this period with the monthly interests, the short-term loan can lead to a high monthly installment. In case you are on a tight budget, you may find it difficult to repay a private loan.
#3. Risk of Getting Scammed
The law demands that every lender should register with the Security and Exchange Commission (SEC). However, some private lenders are there to fraud people, especially through online means. Such lender advertises their services through online channels such as Facebook and trick customers into providing their personal information. These scammers will then use that data to steal from you.
Make sure you weigh the pros and cons before getting a personal loan. However, if you have an emergency or la