Lender Definition and Meaning
Posted On 06/07/2019
Recently, state-owned commercial banks are not very willing to issue loans, as they are trying to protect themselves. The reasons influencing this decision may bу the missing amount of required documents, poor customer credit history, unstable or low income, etc. In a situation when the bank is not going to provide financial assistance, you should pay attention to the activities of private creditors and what services they are willing to offer.
Private lenders are individuals who have large financial savings and prefer to lend their money to benefit from this process in the future. From the commercial side, it is much more profitable for them to issue a loan and receive interest from it than to invest in any projects or put this money into a bank account.
This kind of lending in recent times is gaining popularity. Firstly, there are a lot of people willing to provide such a service. Secondly, obtaining a loan from a private lender does not imply strict requirements.
How Do Private Lenders Work?
Considering the lender meaning, each private lender works in almost the same way, so to get the desired amount, you will need to perform several actions:
- Provide a passport and a taxpayer code;
- Fill out a special form in which the full name of the client, date of birth and age, residential and registration address, amount of monthly income, phone number, required loan amount, and bank details are mentioned.
These loans have a number of certain advantages:
- Lack of strict requirements and numerous documentation;
- Speed of service;
- Flexible terms of debt renewal;
- Receiving funds at any convenient time.
Along with the advantages listed above, there are certain drawbacks. First of all, this is the risk of contacting fraudsters. To avoid such unpleasant situations, you should familiarize yourself with their most common tricks. So, you risk taking a private loan from a fraudster if:
- The lender requires an advance payment;
- The person does not express the desire to communicate with the client personally;
- The lender requests passwords and logins from personal accounts in Internet banks or payment systems;
- He or she is interested in the specific characteristics of your card.
These are companies that work with lenders on a formal contractual basis. Their main task is to help the client find a profitable option and increase the chances for approval of the application. The commission is from 3 to 15 of the amount issued.
Is It Worth Making a Deal?
First of all, the decision depends on the current life situation. If you see that the only right way out is to use the services of an individual loaner, then choose a trusted investor and do what you need. When choosing a lender, do not forget to read the reviews left by previous customers and carefully read the terms of the loan.