When applying for a fast loan to a financial institution (not a bank), keep in mind that interest rates for this type of loan range between 4-6% per month depending on collateral levels. This amounts to 48-70% per year. Although shocking, this percentage is justified because of the high credit risk is borne by the creditor.
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High Credit Risk When Applying for Fast Loans
And the credit risk is high because the clients of these financial institutions do not usually resort to bank loans. The reasons for this are different:
- Customers already have one or more credits
- They need an extremely fast response – within days
- Their income is not tested and does not affect the credit approval
The above-mentioned interest rates are the average for the financial institutions. It is possible to find a lower interest rate offer, but it usually has an initial fee that can reach 10-15% of the loan amount, which ultimately makes it more expensive. Always read carefully and inform yourself about the different charges.
The average amount of loans
The average amount of loans granted by non-bank financial institutions is typically around 10,000 pounds and the average payout period is about 2 years.
Before you make a mortgage loan, the property you offer for collateral is valued by an appraiser. This is our employee who has great experience in the field of construction and real estate and can quickly and competently assess the market value of the property and hence the value at which the lender could sell it if in case of non-repayment the loan was forced to sell.
Typically, the ratio of the loan to the value is 40 per 100. For example – you mortgage a property you have acquired for the amount of 40,000 pounds. The value estimates that under current market conditions it could be sold for 37,500,000. Therefore, they can provide you with a mortgage loan amounting to 15,000 pounds (40%).
The usual procedure for applying for a quick mortgage loan in non-bank financial institutions is as follows:
- Contact lender by phone or email by providing information about the amount of credit you want and the property you offer as collateral.
- The lender calls you on the phone for prior approval and arranges for a meeting to finalize the amount of the credit and review the required documents.
- You receive official approval within 1 business day.
- Their valuer makes a view and evaluation of the property if you take a mortgage loan.
- You sign a loan agreement.
If you still have any hesitation about applying for a fast loan, contact the lender. They will answer all of your questions and help you with the documents needed to get a quick loan.
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“For some people, the situation has become so desperate that they look for a quick financial fix by opting for a fast loan to pay another loan,” says John Manyike, the head of financial education at Old Mutual. “This can be a crippling decision, as it only adds to long-term financial strain and starts a vicious cycle of debt that is very hard to get out of.”