3 Advantages of Taking Out a Private Loan

Today, there is no dearth of loan providers if you require emergency short-term funds. Thanks to the internet and its amazingly vast reach, you can avail a loan online from the comfort of your home, without having to step out. While traditional banks still exist today, with their loyal customer base, a number of young, salaried millennials like you and I are choosing to explore newer options even when it comes to borrowing money. NBFCs, FinTech companies, and private loan companies are also being considered as a source of short-term funds. While there are many reasons for this, the convenience offered by these lenders, along with freedom from the myopic lending standards of banks (your credit score is the prime factor that decides your eligibility) are the two main ones.

If you cannot qualify for a personal loan from a bank (maybe because of a low credit score), you can also try approaching a private lending firm. We’ve listed three advantages of applying for a private loan over one from a bank:

1.Low Credit Score? No Problem

At the beginning of the article, we did mention the myopic lending standard that banks use to decide loan eligibility – your credit score. If your score doesn’t fall into an acceptable range as desired by the bank, then there are high chances of your loan application being rejected. Thankfully, this isn’t the case with private loans. Even if you have a less-than-ideal credit score, private loan companies don’t make their decision straight away. They look for other parameters and data points to determine your ability to repay your loan and have checks in place to ascertain your financial standing.

2. Minimal Documentation

As you know, banks ask for a host of documents as a part of their loan application process. If in case you’re unable to arrange for even one or two documents, that can infinitely prolong your loan processing time. In some cases, that’s even reason enough to get your application rejected. Private loans don’t entail these kinds of hassles. While taking out a private loan, all you need to provide are basic documents like an address/ID proof and a proof of income. They just want to be assured of your ability to repay your loan.


3. Quick Approval

While banks may take anywhere between a week to ten days to process your loan (from application to loan disbursal), private lenders can help you get your funds in your bank account within 24 hours itself, subject to all your documentation being valid. Private lenders online require as little as 24 hours, while those with brick-and-mortar branches may take up to three days to process your loan application. Either way, they are faster than traditional banks.

Wrap Up

The above three points illustrate the benefits of approaching a private lender for a loan as opposed to a bank. It is recommended to do your due diligence and read up on various lenders as well as check for customer feedback before zeroing on your private loan company.

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