Loans have become an integral part of the survival of human beings in afinancially stressed economy. For one to get through their projects, bothdomestic and commercial, they find that they require credit assistance from thefinancial institutions, which in return charge some interest rates for theservices that they provide to their customers. The level of these interestrates varies from one institution to the other. Some institutions chargehigh-interest rates on the loans that they lend to their clients, depending onthe factors that they consider during the designing of their loan products.However, there are two main categories of lenders across which all theborrowers should weigh their options before deciding on the one that best suitstheir requirements.
One of the categories of lenders consists of banks and other financial institutions. These are the most popular among the credit customers since they have branded their names in the provision of other services other than lending. These are the institutions that facilitate the same borrowers in the management of their savings and also other investment activities. For this reason, they manage to get a lot of goodwill from their customers, and many clients tend to move to these institutions for financial assistance. Some of the banks lend the money directly from their coffers while most of them act as loan brokers. They get the funding from the actual lenders and subsequently lend the funds to their clients at some fees.
The other category comprises the private lenders or the direct lenders. These are institutions that have specialized in the lending services and give the funds directly to their credit customers. These institutions, despite their unpopularity, stand a better chance to provide better services to their customers since their products are customized to suit the needs of the customers at hand. Some of these lenders have even developed some mechanisms whereby they can access their customers through online platforms while the customers can also access their services through the same. A perfect example is the online installment loans direct lender. These direct lenders have ensured that their customers get products that best fit their needs and in the most efficient means possible.
Despite the popularity of the banks as good and useful lending institutions, there are some benefits that the clients of direct lenders enjoy, which the banks are unable to provide to their customers. Here are some of them:
The bank, as a lender, is bound by the regulations and rules of the entire institution and, therefore, it can be quite challenging to waive some of the requirements that might be necessary to a particular client to feel the usefulness of the loan product. On the other hand, the loan officer at the direct lender interacts with the loan customers and listens to their personal needs. These lenders have the jurisdiction to waive some of the requirements that are in the loan structure to the extent that they can suit the requirements of the customers as much as they can remain profitable.
All the lenders, including the direct lenders and the banks, charge some administrative fees which enable them to run the activities that sustain the administration of the loans. However, as stated earlier, most of the banks act as brokers of these loans on behalf of some direct lender, and hence they tend to charge higher fees compared to the direct lenders. On the other hand, the direct lenders only charge the fees that are necessary to sustain the management of the loans and not any other overhead charges, as the banks do.
Many banks offer a wide range of loan products, which appear quite useful to the customers purchasing their products. However, there is one unique disadvantage that comes with these products by the bank; they are all standardized. This means that the same products are expected to meet the varying needs of the different customers who seek their services. They have no authority to alter the product features to suit the specific needs of different consumers. On the other hand, private lenders have all the powers and liberty to design and develop loan products that are tailor-made to suit the needs of specific consumers. They can also modify the existing products so that they can suit individuals with more specific requirements than specified in the original product designs.