In our opinion, this question cannot be clearly answered. Even in the best products, someone will always find a drawback. What’s more, what is a plus for one person does not necessarily have to be for someone else.
Of course, any obligations that non-bank companies offer us are much more expensive than a bank loan. Such companies are primarily focused on their profit. Therefore, a loan is, in principle, much more expensive than a loan.
Do you need loans?
Nonetheless, non-bank loans are still needed. They fill a very important part of the credit and loan market.
Remember that banks and credit unions are required to comply with certain rules when verifying a potential borrower. To receive a loan, we must pass a credit check and credit history check. What does this mean in practice? Namely, the fact that people employed on an indefinite-term employment contract with the right income, whose liabilities are lower than revenues, have the best chances of getting a bank loan. Loan on demand is not available in every bank. For this we must also have a positive credit history at BIK, i.e. the Credit Information Bureau. There, in turn, not only is the fact of repayment of previous liabilities, but also whether we did it on time. It is enough that we do not meet one of the conditions and our chances for a bank loan are negligible.
We also know the realities of the current labor market and earning. If we are not alone, we certainly know someone who is employed on a contract of work or earns some extra money. In general, its receipts are greater than can be documented before the bank.
Is non-bank loans wrong?
Loan companies operate on slightly different principles. Most importantly, they are not required to document customer employment or income. They are also not required to verify the borrower in BIK. Of course, they can do all this, but they do not have to take this information into account when issuing a decision to grant or refuse a loan. In addition, if they require any certification, they accept virtually every source of our income. They are primarily interested in the fact of regular inflows to the account, not their source. They are also more favorable to our possible stumbles in BIK.
So regardless of how much the loan costs, we must admit that this category of financial products is also needed. Without it, many people who borrow money even though they regularly pay their debts would not have a chance for a loan. That is why loans cannot be considered in terms of good or bad, because for some it is the only option to borrow money because the market of banking products is closed to them.