Direct Lenders vs Banks: Which Option Is Better for Quick Loans?
Quick loans are small emergency loans, not aimed at subprime borrowers, to help them tide them over during financial emergencies. The maximum loan amount is up to €1,000. Since they are required to be discharged in one fell swoop, they are also called lump sum loans.
When it comes to borrowing, you can choose either banks or direct lenders. Banks also accept applications from subprime borrowers, but the rejection rate is quite high. They usually have stricter criteria than direct lenders.
Direct lenders are usually more flexible than banks. If you have a good credit rating, you will certainly prefer your bank, and if your credit rating is slightly tainted but not extremely poor, you can choose between banks and direct lenders.
It is worth noting that banks do not offer small emergency loans such as payday loans and quick loans. These loans are provided only by direct lenders. It means when it comes to taking out quick loans, you will have to contact direct lenders, as banks do not provide these loans.
Quick loans online are available from various direct lenders. You are eligible for these loans even if your credit rating is poor. Note that quick loans will be available at different interest rates from different lenders.
Why quick loans from direct lenders are better
Here is why quick loans from direct lenders are better:
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Speed
Direct lenders are known for convenience and speed. Having submitted a loan application, lenders will make the decision in a few hours. As quick loans do not involve a large sum of money, the lending decision is made based on your income sources.
Most lenders will not run a hard credit check because these loans are aimed at subprime borrowers. They will run soft inquiries, which do not show up on your credit report, which means your credit score will remain the same as before.
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Flexible
Personal loans can be obtained from banks as well, provided they are not too small as emergency loans, but when their deals are compared with those of direct lenders, you will find that the latter are more flexible than the former.
Banks usually follow strict criteria. Not only do they expect you to have a good credit rating, but they will also want you to have a strong repayment capacity. If you owe debt, they will most likely restrict the loan amount and charge high interest rates.
Fortunately, direct lenders are more flexible. As long as you have been paying off your current obligation, this will not get in your way. If your income is not enough, they will offer a longer repayment term. So, if you are looking for flexible deals, direct lender loans will be the best bet for you.
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Approval process
The approval process by direct lenders differs from that of banks. The latter uses traditional methods to evaluate your creditworthiness. They heavily rely on your credit rating. If your score is not up to scratch, they will repudiate your application.
However, direct lenders are a bit flexible. They evaluate your credit score, but they do not treat it as the be-all and end-all. They would rather take into account your overall financial condition. If you prove your repayment capacity, you will most likely receive the nod.
However, it is worth noting that money lenders in Ireland charge different interest rates. You will have to do a little bit of research to ensure that you are choosing the most affordable deal.
Direct lenders vs banks – which is better?
Quick loans are generally provided by direct lenders, not banks. They are also called online loans with fast approval, but personal loans are available from banks as well. The following table demonstrates the difference between the two institutions based on some aspects:
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Key aspects |
Direct lenders |
Banks |
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Approval speed |
Money will be transferred to you within 24 hours. However, if the loan amount is large, it will take 48 hours. |
Banks do not provide lump-sum loans. Personal loans from them take at least a week to get approval. In some cases, it may take up to two weeks. |
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Documentation |
Minimal documentation is required. Normally, you will need to submit your pay slip or bank statement in case of large loans.
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