The main difference between a loan and a loan
What you need to start our considerations with is to set a clear line between a loan and a loan. It is often the case that these terms are used interchangeably. Of course, this should not always be treated as a mistake, e.g. when these terms are not used as a product name, but merely a term for borrowing money.
However, for our needs, it should be noted that a loan, also a commission loan, is a product that only banks and credit unions have in their offer. The principles on which it operates are governed by the provisions of the banking law. Simply put, this is money borrowed by the bank on the principles set out in the contract, for a specific time and purpose. In return, the borrower undertakes to allocate funds from the loan for the purpose specified in the contract, pay the installments on time and cover all costs of the loan.
In turn, loans can be granted to us by both institutions and individuals, but they must be the owners of the funds borrowed. The loans operate under the terms of civil law. It also means that non-bank institutions establish all criteria based on which they grant the loan. As a rule, a non-bank loan can be used for any purpose.
The cost of the loan and the cost of the loan
If you don’t want to, you must admit that credit will be a cheaper form of borrowing money. Banks lend us money that they don’t really own. In addition to monetary issues, they also have other goals. In turn, non-bank institutions dealing in granting loans are created primarily to earn a good income. And making money selling loans is their main goal. However, it should be noted immediately that this should not be assessed in advance and commented on in one sentence, namely that loans are bad. Why do we choose payday loans?
Can a loan be better than a loan?
On the contrary, for some people the loan may be better. In other words, for many people a loan is the only way to get financial support. One may be tempted to declare that the banks have a pre-defined profile of the preferred borrower. If we do not enter it, the bank will not grant us a loan. Non-bank companies are targeted at a much wider audience, and the criteria for granting a loan are much less restrictive. For this reason, the majority of people for whom the bank did not grant a loan will easily receive a loan from a non-bank institution. And as you know, life varies and sometimes, regardless of the price of the loan, is the only chance to solve our problems. Therefore, despite the high price, the loan cannot be determined simply by saying the word bad.