Bank Loan vs Private Lender Loan

For those that want to take out a loan, there are two types of loans:

  • Bank loan
  • Lender loan

The majority of people will go to a bank to request a personal loan because of lower rates than other lenders. Also, all banks have access federal funds that are low as 0.25% interest rate. Most banks offer interest rates about 6.25% on a loan meanwhile a private lender, their interest is much higher. The reason why a private lender offer high interest rates is because they get funds from investors who are looking for decent rate of return.

bank vs lender loanThey also get funds from other banks that lend these funds at a higher rate. In order for private lenders to make money, they offer the client a higher rate to cover the cost. From a client stand point, they rather go to a bank instead of a private lender.

In conclusion, understanding finances, loans, interest rates, and investing are one of the most important things that everyone should learn and it will help people making wise decision with their money.