Emergencies are hard to predict, and not everyone has the financial means to cover the necessary costs when something happens. In cases like these, fast loans become a necessity.
Loan providers, including both banks and private money lenders, offer fast loan products. These financing schemes promise approvals within less than a day and almost instant disbursement upon confirmation and document signing. The question stands: Are banks or moneylenders better when you need fast loans during times of emergencies?
Quick loan. Instant loan. Emergency loan. Same-day loan. Although marketed with different names and in slightly different forms by different providers, each of these is a manifestation of the fast loan archetype, characterised by streamlined processing, approval and disbursement.
Borrowers who seek fast loans usually apply for them during times of urgent financial needs, such as to pay for medical bills, fix a major housing or plumbing defect, repair unexpected car malfunctions and the like. They offer increased convenience due to streamlined application processes and loan disbursements.
As a borrower, you have multiple sources from which you can apply for your emergency loan. These fast loan providers generally fall into two categories, namely banks and private money lenders. Both these financial institutions differ in several ways when it comes to providing emergency loans, which we will discuss in more detail.
Generally, to qualify for a fast loan product from a bank, you should earn a minimum of $20,000 a year. This works out to about $1,667 per month. Banks rarely offer fast loans to foreigners, but banks who do require these foreigners to have an annual income of $30,000 or more. This may be restrictive to certain borrowers who may not meet this requirement.
Fortunately, private money lenders extend these emergency funds to those earning below $20,000 per annum, as well as to foreigners. However, each money lender has a quota for foreigners borrowing from them, which is why foreigners usually stand a better chance at obtaining loans from private money lenders if they apply earlier in the year.
Generally, banks take a shorter time to process fast loans compared to private money lenders.
However, this only happens on condition that you fulfil the bank’s standards when it comes to creditworthiness, including your credit report, income, current debt servicing ratio and other parameters. Many banks offer quick loan products where approvals can be granted within less than an hour after application and document submission.
When moneylenders offer personal loans, they are subjected to certain mandatory requirements by the law. One of these is that they have to meet the borrower in person at their registered business premises for identity verification before the loan contract can be signed and the money disbursed. This may lengthen the processing time, although applications can conveniently be done online, and approvals are usually granted within one business day.
Read More: Emergency Loans: Get the Cash You Need Fast
Disbursement periods by moneylenders depend on the private loan provider themselves. Most will be able to disburse funds to you within the same day after you’ve signed the loan agreement, whereas others take slightly longer.
Banks are able to disburse your urgent loan funds within a short time after approval too, usually within the same day depending on your eligibility.
Being in need of urgent financing can be a stressful situation. Deciding whether to apply for a fast loan from a bank or money lender is perhaps one of the key decisions you will need to make during this time. The best loan provider depends on your personal circumstances, with money lenders offering more flexibility to those with less than perfect credit scores or incomes.
Making multiple fast loan applications, although seemingly logical, will actually portray you as credit hungry. You can read more about this here. Instead, consider Lendingpot, where, with just one simple application ,you can reach out to multiple lenders. Register here to begin your application.
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