The days when a customer with low creditworthiness bounced off the door of financial institutions are gone forever. Today, money can be borrowed even by a person who is in a poor financial and economic situation. Non-bank companies offer special products tailored to this type of customers.
Each institution granting credits or loans is obliged to check the creditworthiness of the potential customer. This verification is usually based on data from registers such as the Credit Information Bureau or the National Debt Register. The lender also examines the current financial capacity of the person in relation to his current life situation. Based on this analysis, a credit / loan decision is issued. In the case of low creditworthiness, the customer must take into account the negative response of the lender.
Unlike banks, non-bank companies look a little favorably at people with insufficient credit history. Usually they are more willing to lend them money if the borrower applies for a loan of several hundred dollars . However, if the loan application is for a much higher amount, the lender may already be reluctant to consider it successfully. There is a risk that the loan will not be repaid on time and the company will have to wait for months to recover it. The likelihood that borrowed funds will not be recovered at all increases.
Therefore, to protect their own interests and at the same time not block the client’s ability to get more cash, with loans for large amounts, non-bank companies increasingly require additional security. This security may be a pledge or surety. We’ll take a closer look at these products.
Pledged loans, i.e. collateral with owned property
To obtain financial support in non-bank companies, we can decide to take out a loan against a flat or a car. In the case of a loan against real estate, a number of additional documents should be attached to the application, e.g. a notarial deed confirming ownership of the property or land and mortgage register number. By choosing the option to secure the loan with your car, we must make the lender its co-owner . This requires a visit to the communications department to exchange vehicle documents for new ones. Of course, the lender is a co-owner of the car only until the commitment has been paid.
Considering the above requirements, it cannot be denied that a secured loan is a lot of trouble. So we usually don’t get it in “five minutes”. If we want to get money, we will have to be patient and meet a number of different criteria, point by point.
However, before we reach for the solution, let’s think carefully about this step. We risk our assets in the event of problems with repayment. So let’s not take this type of loans if we don’t have prospects for regular repayment.
Loans with a surety, i.e. help from a third party
A guarantee of the so-called guarantor (girrant). We probably know this solution perfect for banking operations, where until recently a close relative’s loan raising was an easy way to get the needed cash. In the case of large loans in non-bank companies, we can also come across the option of a surety . Sometimes a lender finds us a guarantor, but usually we have to try to get him ourselves. And what are the benefits of such a solution? Well, in the event of problems with the repayment of the loan, the non-bank company will claim its receivables from the person who guaranteed our loan. This security is a perfect “back” for a loan company client.
Unfortunately, the institution of the giraffe is associated with a high level of risk, so it will probably be difficult to convince someone to this kind of support. And if the lender finds a guarantor, we have to reckon with the fact that he won’t offer his help for free. A loan with a surety can be a costly choice for us, but on the other hand, in a situation without a gate, it is the fastest option to obtain the necessary funds.
Both products presented above are solutions created for people with poor credit standing. For many, however, they may seem somewhat controversial. Indeed, when deciding to take out a loan or use the guarantee of the institution offered by the lender (of which we do not know anything), we risk a lot. That is why such a decision cannot be made on the spur of the moment. Perhaps a better move would first be to take action to increase your credit standing . Better ability is an additional loan option that will not require us to put our assets at stake. So consider this issue.