It’s no secret that fast loans are much more expensive than other loans. You can also borrow a home for a few percents of annual interest. And fast credits can cost even more for one month! It’s no wonder that people are looking for some cheaper alternatives in these circumstances.
The traditional alternative – a consumer loan from a bank – is hardly the solution. They may be cheaper, but the conditions for their issuance are much stricter and the issue time is quite long. Such conditions do not necessarily apply to everyone. Therefore, people try to look for something similar to instant credit but at the same time much cheaper.
Suggestions are not just elephant dreams – they really exist
Therefore, such human searches are certainly not fruitless. These are loans from individuals. These types of loans are comparatively cheaper than average fast credit and may even be more flexible. Where’s the dog hanging? Well, truth be told, there is none.
You will repay as much as you have borrowed and there are no additional terms in such an offer. This may seem unusual, but the reality is exactly that. Why are private loans much cheaper than creditors? We will try to answer that question now.
Why loans from individuals are so cheap
It has already been mentioned that the annual interest rate on quick credits can even reach the statutory ceiling. Which means a few tens of interest a year. A loan of USD 100 per year may require repayment of USD 150 or more. Such an enormous annual interest is common practice. Offering quick loans online justifies the fact that no one borrows such interest for a longer period of time, so this is normal. No one is traveling from one city to another in parallel with a taxi, so complaining about high taxi fares would be illogical. Therefore, long-term loans are incomparably cheaper than short-term, fast loans. Maybe there is truth in that. While this position could be criticized, this article is not about it.
Whatever the practice of this business and how they justify it, there are certainly alternatives for them. One of them is loans from private persons. That such loans are cheaper should not be surprising. In addition to earning a profit, creditors must keep their capital, pay their salaries, and so on. Therefore, their desired profit (which is already high among businesses) is huge. Compare that to a regular, small investor who just wants to put some of his savings somewhere where he can safely make a dollar or two. Such a person will definitely not want to pluck your last penny under any circumstances.
And when we have a lot of these people in one place and let them compete in lending money, the result becomes fabulous. The interest rate then falls to such an extent that even consumer loan interest rates become comparable. And that’s wonderful. Due to high competition and lower expectations, not only will those seeking a quick loan online get it quickly enough (though not within 15 minutes), but with significantly lower interest rates.
Where to borrow from people?
Where should I go to borrow money from private individuals? Such credits are provided on a peer-to-peer lending platform such as Savy. It is a platform for small investors who compete with one another when applying for credit, offering the lowest possible interest. The lower the risk of default on your loan, the better terms you will be offered. It is these individuals who guide how much and how cheap they lend.
However, as always, check several times that you are offered the best terms. Even with the best terms, you can earn more by borrowing where your free loans are. This way you won’t even have to pay interest. And here no matter how cheap the credits from individuals will be.
One way or another, getting a loan from people can be really helpful even when offering a loan for free. You see, sometimes it is more profitable to borrow with interest than without them. The reason for this is very simple: some records just add a great deal to your credit history. There, a record of people getting a loan that is properly received and repaid can be much more useful than a record of another free loan. Therefore, if you want to get a loan with a bad credit history and both options are available to you, definitely borrow directly from the people. This will simply secure a good record in your history and help correct it.