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A consumer might have some advantages if they borrow money from a financial company rather than from a bank.
The Advantages of Getting a Loan From a Finance Company
Consumers may have the advantage of getting money quickly and easily delivered from finance companies rather than commercial banks or thrift. Finance companies are able to charge low interest rates on loans. Commercial banks, on the other hand, aim for profits by charging interest and fees such as checking balances and withdrawals. A commercial bank also conducts a thorough investigation on the borrower or company, which can make it difficult to obtain funds (Revtek Capital 2019, 2019). Poor credit history is more common than credit score. Commercial banks take credit history very seriously.
Additionally, loans obtained from finance companies are often more flexible that loans offered by commercial banks. Customers can also extend or renew loans through finance companies more effectively. A customer might also benefit from borrowing money from a financial institution because of their low rates. These fees are typically lower than the commercial banks and other lending institutions like thrift. Thrifts, on the other hand do not provide financial services that are based upon a single-stop shop available at a finance company or other lending institutions.
Finance companies approve loans faster than commercial banks or thrifts. Additionally, because finance companies are not regulated federally but by the state, they have more freedom to change their rates or terms. (DeMerceau 2002). Financial companies offering loans will also benefit from less regulation. Financial companies, however, aren’t covered under federal and state laws, as they differ from other financial institutions like commercial banks.
There are distinct advantages and disadvantages to financial companies, banks and thrifts. Because of their ease, convenience and competitive rates, as well as the low total fees, financial companies tend to be more popular.
DeMerceau, J. (2022). Advantages & Disadvantages of Bank Loans. Chron.com Small Business Retrieved June 13, 2022 from https://smallbusiness.chron.com/advantages-amp-disadvantages-bank-loans-47377.html.
Revtek Capital. (2019). Bank Loans: Advantages and Drawbacks. Revtekcapital.com. Retrieved June 13, 2022 from Revtekcapital.com https://revtekcapital.com/blog/advantages-and-disadvantages-of-bank-loans/.
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