Why Compare Lenders before a Loan is Needed?

People with no credit history, a high debt to income ratio, or a rocky credit history do not typically qualify for loans from a bank or credit union. If family or friends cannot help in times of need, the alternative is a non-traditional lender. This term refers to private lending companies that require minimum information, do not run standard credit checks, and have a high rate of approving applicants. These loans do come at a price.

Interest Rates

The interest rates on non-traditional loans are extremely high and penalties for late payments are exorbitant in many cases. Rates and penalties differ among lenders but will always be much higher than those of a bank. Finding a lender that offers slightly lower rates can save people money.

Loan Types

There are lenders that specialize in payday loans. These need to be avoided because the rates are the highest the law will allow. The entire amount of the loan plus the interest must be paid back all at once when the next payday arrives, hence the name. Installment loans are a bit easier to pay back because the amount and the high interest rates are spread out over six months, depending on the terms of each lender.

Title loans require people to use a car, house, or a valuable collection as collateral. If the loan is paid back in full and on time, the item is returned. If the person defaults on the loan, he will lose the car, house, or collection. The risk is high so consider this possibility carefully.

Compare Early

Comparing lenders before money is necessary gives people an opportunity to make an informed decision regarding which lender to use should the need arise. When the car needs repairs or the furnace breaks down there is no time to compare companies because money is needed fast. In those situations, people tend to apply online at the first website that comes up in the internet search.

Some lenders offer rewards programs for frequent borrowers. Using on of those companies, such as Maxlend Loans, will save money if other loans are needed in the future. Borrowers can enjoy longer re-payment terms, lower interest rates, and the opportunity to borrow larger amounts of money.