Banks and payday loan lenders. What’s the difference?

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When Canadians need a loan, they usually turn to the bank first. Banks offer lower interest rates, but lend to high credit scores. If someone does not qualify for a loan, they might turn to a payday lender. payday loan lenders offer higher interest rates than the banks, but provide loans with lower credit scores. However, did you know there are options in between? They offers discounted rates for non-bank creditors.

Let’s consider the difference between, banks and payday loan lenders.

Banks: Excellent interest rates for individuals with excellent credit

Banks: Excellent interest rates for individuals with excellent credit

Banks often offer borrowers revolving credit products, like a credit card. Occasionally they will offer installments loans, but only to specific customers.

Banks are able to offer the best interest rates on their credit products for a few reasons:

  • They only lend to individuals with high credit scores, which means there is less risk than borrowers will default
  • In addition to lending money, banks accept deposits. They use deposits as a source of money for their lending services, meaning banks do not pay interest on the money they lend out.

Is a revolving credit product “better” than an installment loan?

Even though revolving products, you’re often carrying a balance or getting behind on payments, and you can easily get an uncomplicated interest. Read more about how interest works here on revolving credit products here.

What if I do not qualify for a loan?

Even though the banks may not be an option for some borrowers. So where can these individuals go for a loan?

Lower interest rates than other non-bank lenders for individuals with fair to good credit

Lower interest rates than other non-bank lenders for individuals with fair to good credit

offers more than just other non-bank lenders. We offer both secured and unsecured loans with 21.99% on personal loans and 12.99% on mortgage refinancing. Your interest rate, your credit score, income and other factors.

We understand a lot of people to come up with a solution for urgent or unexpected expenses, so we try to make the application process as quick as possible. However, we also understand it’s important to find a loan that’s right for you. That’s why Lending Specialists will spend your time with you and your budget.

Looking for more information about loans? We have several tools that you can assess your debt, you can qualify for a loan or a debt consolidation loan.

Ok, so do the banks have the same interest rates and ‘s in the middle, what is the other end of the spectrum?

Payday loan lenders: Higher interest rates for individuals with lower credit

Payday loan lenders: Higher interest rates for individuals with lower credit

payday loan lenders offers the best interest rates on credit products, but it is easier to qualify with a payday lender than with a bank. payday loan lenders are generally focused on the payment of your account.

Another way payday loan lenders are different to the amount of money they lend to customers. Usually the maximum is only a few thousand dollars, which may not be beneficial for customers.

When you take a step back to look at the financial services industry, you’ll realize it’s not so bad. Rather than banks at one end and “everyone else” at the other, the lending landscape is a spectrum, with different lenders serving borrowers with different credit scores and borrowing needs.

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