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How to Choose the Lender That’s Right for You

Renting a loan can be a Catch-22 situation for both the lender and the investor. It is incredibly essential for a debtor to borrow credit from a responsible and suitable granter. It is recommended that there should be a healthy and functional relationship between the lender and the investor. He should be respectful towards the investor. Before renting a loan, a person needs to do some research on the granter. Nowadays, there are various credit brokerage firms like, which offers the investor to take a loan from authenticated investors. Here are we mentioning some of the qualities that a borrower should look at the loaner. 

1) Should have an excellent lending limit

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A granter needs to have an extended deadline for lending the funds. In case a borrower wants a specific amount of loan to fulfill a particular financial need. Therefore, when a borrower requests for borrowing funds from the lender and the application gets rejected due to the availability of less amount of funds, then this can damage the reputation of the lender. Therefore, the granter should have adequate resources so that they can easily lend funds to the borrowers.

2) Should be exceptionally flexible

The banks and various other financial institutions that lend funds for the loan should follow specific guidelines. Apart from that, they should be utterly flexible, so that the borrower can build a good relationship with them. When the usurer is flexible towards their financial terms, then there are fewer chances of loss. It is not recommended that the lender should go out of the way or break their own organization’s rules, but meanwhile, they should not be strict as well. In recent times there are different credit brokerage organizations that are very flexible towards lending funds to the borrower.   

3) Services should be highly responsive

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There are some banks as well as some other financial institutions which have extremely complicated terms and conditions. Therefore it becomes very confusing for a person to understand. That is the main reason the lenders are suggested to lend loans to elementary conditions. One of the significant characteristics of a suitable usurer is that they should have the ability to explain the terms and conditions to their potential borrowers. Credit broker firms have straightforward and yet strict terms and conditions that can be easily understood by any person. 

4) Should have an exceptional reputation in the market

Is it possible for someone to borrow funds from an organization that doesn’t have any good reputation in the market? Not, therefore an organization must possess an excellent reputation in the market. When a person borrows money from an investor, one of the essential things which he/she looks in it is their loyalty and their capacity to lend the funds.

The organization must be trustworthy and reliable so that the borrowers can borrow funds from them without any hesitation. Secondly, their process should be straightforward and user-friendly so that the people don’t have to face any problems while submitting their application for the loan.

5) Should have relevant years of experience

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Besides these, the lender should have relevant years of experience in lending funds to its clients. That is because it becomes tough for a fresh borrower to borrow money from a newly established firm.

When the investor has good experience in the industry, then it becomes effortless to do the exchange. After all, experience matters the most.

6) Try to establish a good relationship

It is observed that the lenders generally regard themselves as a higher entity than the borrower. But in reality, this is not the way how things work. No person would want to create a relationship with the lender who belittles them. The investor should try to establish a healthy relationship with the borrower.

The lenders should have these characteristics as they make them ideal for the market. A loan lending organization or a lender should be trustworthy and have surplus amount to offer funds. There are credit firms that have an excellent reputation in the market. At last, the lender should also do thorough research on the borrower’s profile.

The Borrower-Lender Relationship

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What is the difference between the lender and the borrower?

A loan can be defined as a one-time financial operation (the income from the capital loaned is made in one go) and many consideration (the money and the interest are repaid in several periodic payments).

Two fundamental profiles are involved in this operation: the lender and the borrower. Let’s learn more about them!

What does it mean to be a borrower?

When it comes to a loan contract, the borrower is the one who receives the money. That way, he acquires the obligation to repay it within the expected period. He will do that through the amortization method that has been agreed upon. Also, he is in charge of establishing the credit rating of the loan, since this will depend on its ability to meet its debts.

On the other hand, when applying for a loan, the investor can acquire different degrees of involvement that often depend on the type of loan. Let’s see what those are:

1.The personal guarantee loan: When requesting this type of loan, the creditor agrees to repay the capital along with interest, using for it his current assets and what he may obtain in the future.

2.The collateral loan: With this model, the financier pledges a particular asset. In case of not complying with the loan repayment in the agreed terms, that asset will become the property of the granter.

Types of a creditor

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There are two types:

  • A natural person.
  • A legal person

Regardless of the type of creditor, they all have two universal rights:

  •  Right to early repayment: the financier has the power to pay the entire loan before the due date, without the interest of the remaining payment time being applied.
  • Cancellation of the contract: the investor can cancel the service after requesting it, without any cost or additional charges as long as he does so within a period not exceeding fourteen days. If not, the investor will have to pay the entire amount together with interest accrued up to that time.

What does it mean to be a lender?

The usurer, meanwhile, is the natural or legal person (usually legal) that lends the money in the loan.

The lender acquires a series of rights over the usurer, for example, applying the repayment mechanisms (taking the collateral or part of the creditor’s assets) stipulated by law, in case of that the usurer does not return the entire loan in the manner and term agreed upon.

However, the usurer also has its limitations in the exercise of its rights. Also, if the investor is declared insolvent, both the usurer and the investor must submit to the arbitration. That is if they want the loan to be repaid.

Types of lenders

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As with investors, lenders can be both natural and legal persons:

Private lenders: natural persons who, on their initiative, lend their capital intending to obtain benefits. They are usually people who have significant savings and use them as a loan to make them profitable. However, before resorting to a particular lender, you have to keep in mind that your economic cost is usually higher.

Besides, some may be operating on their own, without being subject to any regulation. That involves a crime of fraud and a danger to the investor. This type of investor was once widespread when the only loans available were bank loans, which not everyone can access. However, with the arrival of companies dedicated to online lending, access to credit has democratized, so it is increasingly less common to use private investors.

EFC (Financial Credit Establishments): they are accredited entities for carrying out credit operations. They have a developed business structure and are under the supervision of the Bank of Spain. Their main difference with a traditional banking entity is that they cannot capture deposits from their customers.

About Suzan Vega