Besides commercial banks, there are other places where you can get commerical loans. And some of them can give you better deals as well.
The places from which you can obtain loans include:
1. Commerical Banks
Banks serve the function of collecting money from depositors and then lending this money out to individuals. They oftn have a total package of loans at attractive rates of interest. This is because the cost of funds is low and banks take only the best credit risks (thus the risk and cost of default are low). Demand for bank loans is high, thus banks are selective in the loans they make. The interest rate charged is determined by the selective type of collateral you have as well as the bank's size, which in turn determines how efficient it can be as a middleman.
2. Finance Companies
Finance companies offer the same repertoire of loans except that there must be collateral. In other words, they can only make secured loans. The rates they offer are as competitive as commercial banks as they can accept depositor's money.
3. Your Insurance Company
Your insurance company may be your cheapest place to get a loan to tide over any financial difficulties. Many insurance companies allow policy holders to take out loans againts the cash value, that is the accumulated saving of your life insurance policy. In other words, you are actually borrowing from your own money. For this reason, the interest rates charged are very competitive because the company does not take any risk as the loan is secured by the policy. However, do note that because such loans do not carry a maturity date, borrowers lack the motivation to pay back the loan.
4. Your Own Company
Increasingly, some corporations are offering loans to their employees to buy cars and other assets at very competitive rates. You may be able to obtain a cheaper loan by as much as half the market ineterest rates. Check with your human reource department on what your entitltments are.
5. Friends and RelativesA friend or realtive may be willing to lend you money. Such loans are attractive as they carry little or even no interest payments. But this option should only be a last resort because of the potential for conflict or disagreement. It should only be considered if other alternatives are exhausted or if the terms are very atttractive. But before accepting the loan, draw up an agreement which spell out the terms and conditions, and maturity dates. This helps to a great extent in preventing future conflict.
6. Pawnshops
If you have something valuable and need some money fast, the pawnshop may be a source of financing. Pawnshops lend you a sum of money based on a fraction of the perceived value of your item, but take note that they charge a high rate of interest. So use them only if there are no other alternatives.
The places from which you can obtain loans include:
1. Commerical Banks
Banks serve the function of collecting money from depositors and then lending this money out to individuals. They oftn have a total package of loans at attractive rates of interest. This is because the cost of funds is low and banks take only the best credit risks (thus the risk and cost of default are low). Demand for bank loans is high, thus banks are selective in the loans they make. The interest rate charged is determined by the selective type of collateral you have as well as the bank's size, which in turn determines how efficient it can be as a middleman.
2. Finance Companies
Finance companies offer the same repertoire of loans except that there must be collateral. In other words, they can only make secured loans. The rates they offer are as competitive as commercial banks as they can accept depositor's money.
3. Your Insurance Company
Your insurance company may be your cheapest place to get a loan to tide over any financial difficulties. Many insurance companies allow policy holders to take out loans againts the cash value, that is the accumulated saving of your life insurance policy. In other words, you are actually borrowing from your own money. For this reason, the interest rates charged are very competitive because the company does not take any risk as the loan is secured by the policy. However, do note that because such loans do not carry a maturity date, borrowers lack the motivation to pay back the loan.
4. Your Own Company
Increasingly, some corporations are offering loans to their employees to buy cars and other assets at very competitive rates. You may be able to obtain a cheaper loan by as much as half the market ineterest rates. Check with your human reource department on what your entitltments are.
5. Friends and RelativesA friend or realtive may be willing to lend you money. Such loans are attractive as they carry little or even no interest payments. But this option should only be a last resort because of the potential for conflict or disagreement. It should only be considered if other alternatives are exhausted or if the terms are very atttractive. But before accepting the loan, draw up an agreement which spell out the terms and conditions, and maturity dates. This helps to a great extent in preventing future conflict.
6. Pawnshops
If you have something valuable and need some money fast, the pawnshop may be a source of financing. Pawnshops lend you a sum of money based on a fraction of the perceived value of your item, but take note that they charge a high rate of interest. So use them only if there are no other alternatives.
