Installment loan and bank loan – differences. What to choose?

26 Mar

Do you want to borrow cash, but you don’t know which option will be right for you? There are many financing options available on the market. Check what is the difference between an installment loan and a bank loan and choose the product that’s right for you!

A quick installment loan and a bank loan are two different products. The first one is offered by non-bank institutions, and the loan can only be found in the banks’ offer. In addition, there are important issues you should know about before submitting your application. Check which product will be right for you!

Non-bank installment loan – parameters

Non-bank installment loan - parameters

An installment loan is on offer from non-bank financial institutions. The conditions they are granted are regulated by the Civil Code. How much can you borrow when applying for a non-bank installment loan? The amounts start from 1,000 and end up to 60,000 USD . Remember that the maximum loan amount depends on your creditworthiness. So you need to measure your intentions and apply for the amount you need and which you are able to repay within the repayment period. This usually ranges from 2 to 60 months and depends on how much you want to borrow – the higher the loan amount, the longer the repayment period.

The total cost of a non-bank loan consists of: interest on the loan (max. 10%), commission for granting , loan-related fees , i.e., e.g. the cost of preparing the loan agreement, verification in databases, fee for granting and servicing the loan.  

Non-bank companies do not require too many formalities. To apply for a loan, you will need your ID card, active phone number, and bank account . In some cases, especially if you want to borrow a high amount, you may be asked to document your income and your personal account statement.

The offer of non-bank institutions includes such products as: installment loan, quick cash loan (payday loan), loan without BIK, loan for proof, loan for the indebted, loan for companies or secured loan.

Cash loan in the bank – parameters

Cash loan in the bank - parameters

A bank loan, as the name implies, is granted by banks. The conditions are regulated by the Banking Law. In contrast to non-bank installment loans, cash loans are granted for high amounts: from 1,000 up to USD 250,000 . You can pay back the debt within 1 to 120 months . The final amount of the liability, loan term and terms of granting is primarily affected by creditworthiness.

The final cost of the loan is influenced by factors such as interest rate (max. 10%, but banks usually offer a 4-8% interest rate), commission (you can often find 0% APRC promotional offers ) and any additional fees. Banks may require the consent of a spouse, security or purchase of additional products, e.g. insurance or a personal account.

Unlike non-bank companies, banks require proof of income, bank statement and a valid ID. When presenting an income certificate , the type of contract is also important . The best option for a bank is an employment contract, although you can easily count on a loan if you run your own business or have been working on a contract basis for a long time.

Leave a Reply

Your email address will not be published. Required fields are marked *