Lending institutions in Australia can fluctuate depending on the economy. Banks are especially susceptible when it comes to the ebb and flow of the country’s economic climate. There are times when they’re literally throwing money at people in the form of loans and credit, whereas at other times it can be like squeezing blood from a stone to get any form of finance from them. The state of the economy can also affect the private lending sector.
So the question is, no matter what the current situation is with the Australian economy, is it easier to borrow money from a bank or a private lender?
Let’s find out where to borrow money in Australia and what might be the best option for you.
Can You Do An Online Application?
When it comes to applying online for things like Personal Loans, both the banks and private lenders generally offer the online application process option. This is really convenient, as you can do it from the comfort of home and you don’t actually have to visit an office or branch to apply.
In this regard, both banks and private lenders are on a fairly even footing. However, when comparing the online process itself, private lenders tend to ask fewer questions, making the application quicker and easier to fill out and submit.
Private lenders also require less paperwork and supporting documentation than the banks on most occasions too, so this is also a plus and a time-saver. There is also less chance of having to visit a private lender in person to get loan approval as well, whereas banks sometimes require you to front up and speak to somebody, or present documents personally.
Who Has a Faster Approval Process?
Following on from the point above, as there is more paperwork required, the loan procedure for banks is a little more involved. The time it takes to process loan applications and offer a decision is also usually lengthier for banks compared to private lenders. For Personal Loans, sometimes banks can take weeks to give you a verdict, whereas a private lender will often be able to provide a decision on the same day or the very next business day.
Private lenders put a lot of focus on providing quick service on every level. It’s their competitive advantage against the big banks and provides a valid reason for people to choose financing through a private lender over the traditional banking sector.
How About Personal Loan Interest Rates?
This is not an easy question to provide a definitive answer to on either side of the fence, as both banks and private lenders can offer all sorts of interest rate deals at any time. For accuracy on current rates, you would really need to monitor the current interest rates of banks and private lenders at the time you’re seeking a Personal Loan.
To answer the question in a general sense, more often than not private lenders will offer a more competitive interest rate, but there are rare occasions when a particular bank could offer a good deal on their rates.
You really just have to research the rates at the time you want to apply. Comparison websites can be really handy for this, saving you a lot of time.
What If I Have a Poor Credit Record Or No Job?
If you fall into this category, where your credit score is not perfect or you find yourself temporarily out of a job, then going to a bank to get finance is likely out of the question. Having said that, if you have something of value, like a car, for example, some private lenders offer Pawn Loans against the value of your car.
Let’s say you have a car that has a market value of $20,000. A private lender will offer you up to 60% of its market value. In this instance that would equate to a maximum loan amount of $12,000.
With Pawn Loans, because you are putting up an item of value as security against the loan, the lender does not require a credit nor employment check, so it really doesn’t matter what your credit record is like or whether you have a job or not. If you renege on the loan, the lender keeps your car.
Overall, private lenders actually offer more advantages for loans than most banks.