Bank Not Lending? There Are Other Ways of Borrowing

Getting The Loan You Need

bank lendingWith banks being the first place we usually turn to when we need a loan, it can be a deflating experience when their harsh lending criteria lead to a turned-down application.

But it’s worth noting that approaching a bank to borrow money isn’t the only way you can apply for a loan. Banks are only one aspect of the lending profession, and there are many other lending institutions that can provide loan services that the banks can’t. So let’s look into the many ways you can secure a loan should you need one.

Banks

Banks tend to be interested in specific types of lending and they also impose set criteria for the types of individuals or couples who are deemed eligible for loans. Since the credit crunch, their lending practices have been notoriously strict as they shun the risk that led to the global financial storm that is still raging.

As a result, dependable, trustworthy borrowers have lost out. It is unlikely that banks will lend to applicants with anything but an excellent credit rating (and each lending institution has its own scoring system), so it’s no surprise that many individuals are turned down by banks.

Credit cards

Borrowing through credit cards is one of the easiest and quickest ways of borrowing money. It’s important to bear in mind that it’s more beneficial to purchase goods and services using a credit card than to receive cash advances using a credit card. Requesting cash advances by credit card means that you’ll be charged significantly higher interest rates. And it’s essential to keep on top of repayments.

If you don’t have a credit card, go online to compare credit cards.

Peer-to-peer lending

This is possibly one of the most traditional methods of borrowing, which usually involves borrowing temporary amounts of money from a family member, friend or colleague. The advantage of this form of borrowing is that it’s unlikely there will be any interest charges involved, and if there are the rate will be less than those imposed by financial institutions.

The downside is that if expectations and repayments are not met, then the relationship between the lender and borrower is likely to suffer as a result.

Another form of such peer-to-peer lending is known as social borrowing where such loans are arranged online between parties who may not actually know each other well or aren’t related.

Pay day loans

These types of loans are ‘quick cash’ available to you in times of emergency. Also known as ‘cash advance’ loans these are usually arranged for a short period of time, usually up to a month. All lenders require is that you have a regular income and are able to provide pay slips to prove this. These types of loans have a very high interest rate, so it’s absolutely vital that you read all the terms of the agreement, as well as choose a reputable lending institution.

Guarantor loan

This loan is arranged through a friend or family member with a good credit rating acting as your guarantor. This means that they sign an agreement with the loan company whereby if you default on any payment, they will repay the loan on your behalf.