This is a sponsored guest post.
When getting a personal loan, it’s always best to do your research. Good news is you have a lot of options (Especially in Ontario, Canada) to find the right type of lender that works for you.
Whether you are in the heart of downtown Toronto or looking to borrow money in a small town like Picton, payday lenders and banks are usually around the corner.
Although bank loans and payday loans are designed to help you financially, they both serve a very different purpose.
Payday loans are designed for emergencies or to take care of “quick” money issues. For example, if you couldn’t pay rent this month or if your cell phone bill suddenly got too high.
Bank loans on the other hand, come in quite handy when you need to borrow a lot. Like for investing in a property or perhaps purchasing a brand new vehicle.
Whether you are looking for a small loan or something major, there are a few things you should keep in mind before picking a lender.
Interest Rates
Always deal with a lender who is offering you the best interest rates. This will give you two major advantages. First, you can pay them back right away without breaking your back (Or bank. No pun intended). Which is something you and the lender will definitely appreciate.
Second, this will help establish a proper relationship with the lender and will also allow you to borrow way more money next time.
As lenders are always more comfortable with people who pay them back (Makes sense right?). Previous History
If a lender doesn’t have a history of at least 5 years, it’s best to avoid them. Not because they are not legit but with an experienced lender, your lending options increase dramatically. After all, they’ve dealt with more people and understand how to deal with each borrower’s unique situation
So these are the two main things that you should keep in mind when dealing with any kind of lender.
Once you know where you want to borrow funds from, it’s good to understand how they work as well.
Understanding the Process
Since banks and payday lenders have their own way of doing things. Let’s have a look at each.
Getting money from a payday lender is definitely easier. After all, you are not borrowing much (Most don’t lend more than $3000 at once) so the process is pretty straight forward. You just bring in your IDs (Pretty standard stuff), you pay stubs from work to verify that you have an existing income source, a bank account (So they can deposit your money) and that’s pretty much it.
You can literally walk in and walk out with funds in your bank account. Some lenders may even give you cash right on the spot. Giving out cash may be hard to do these days due to Covid-19, but it still may be possible. Until recently, it used to be common practice.
Now if you were about to borrow money from a bank, the process gets exponentially more complicated. A bank will usually do a credit check, may or may not ask you for a collateral (Depending on what kind of loan you asked for) and this is only the beginning. Next thing you know, you have to sign tons of papers in order, wait weeks before anything happens and who knows, your application might even get rejected.
So at the end of the day, it all depends on what your needs are. If you need a few hundred dollars, a payday loan might be the best.
If you need something bigger, talk to a reputable bank.
