Even the savviest consumer can fall victim to bad information once in a while. When you hear people talk about bank loans enough, it’s easy to accept what they tell you as fact when it may be little more than opinion. To stay educated on any subject, it’s important to review your facts and assumptions on a regular basis. Finance is no exception to this guideline.
“Banks offer the best rates.”
Once upon a time, this was the case. Borrowers sought out bank loans for all their needs and avoided finance companies as though life itself depended upon it. In the technological times of the World Wide Web, the way you do business and think about borrowing money is no longer the same. Online lenders now claim a large chunk of industry lending dollars.
This does not mean your local bank will never offer the lowest rates for your situation; just that it is not your only affordable option. Not having a local established presence means online lenders must work harder to earn your business. Lower interest rates and waived application fees are the primary tools. Your local bank doesn’t often use these tools because the overhead they pay for the building and staff exceeds that of the online company. Your bank branch also trades on its reputation and stability to justify higher interest rates or fees.
“Banks only lend to people with perfect credit.”
If you avoid your bank in favor of high interest lenders because of a spotty credit history, it’s time to give your bank another look. Financial institutions adjust their credit models on a regular basis to provide better service to the communities they serve. When the average American credit score dips below the level widely acceptable to lenders, they take notice. Although bank loans for people with bad credit will never features rates that rival what they offer to A-credit borrowers, you’ll find people with lower credit scores can now receive loans from the bank.
“Your banker has the final say about the loan.”
To a degree, this is still true of smaller, locally run banks. The national financial institutions often use a central underwriting and processing center to determine whether you receive the loan. Banks do this to keep the process as fair and unbiased as they can. Rather than a loan officer who can approve or deny bank loans on a whim, they employ professional underwriters capable of looking at the facts in your credit file to determine your ability to repay the loan.
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