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The Best Money Lending Sources To Try Out
  • There are a few best sources to borrow money though you will find a host of money lending sources when you search the internet, right from the traditional banks to different credit unions or other alternative online sources such as LibertyLending.com and others.
    In this world to live almost everyone needs to borrow money at some point of time. borrowing money may have different needs and purposes such as buying a new home, a car, funding a child’s education or even to start a business. With the advent of technology and its use in the money lending business, nowadays, there are lots of professional financing options that are varied as well. 

    Here are a few popular money lending sources outlines, that you should try out, of course after reviewing the pros and cons related to each. When you look at all the available options there are many you can choose from a variety of financing options such as:

    • The general-purpose lenders such as banks, credit unions, and several other private financing companies
    • Peer-to-peer or P2P lending which is ideally a digital platform that brings together different lenders and borrowers
    • Credit cards that can meet with your short-term funding needs and margin accounts for purchasing securities and
    • A 401(k) plan that can be your last-resort source of financing.
    But before jumping on to any specific money lending option for your needs, know about each of these so that you make the best and informed decision.

    The traditional banks
    The traditional banks offer a variety of loan products that will meet different types of needs of yours such as:
    • Mortgage
    • Personal loans
    • Construction loans and other loan products.
    All these loan products are provided according to the needs of the customers, provided they meet with the specific requirements of the banks for its eligibility.

    If you consider the definition of banks, they take in money or deposits and then offer that money in the form of different loans to borrowers in the form of mortgages and consumer loans. These loans are offered at a much higher rate of interest that what it offers to the depositors. The difference in the rate of interest between the two is their income. Ideally, the nationalized banks make their profit by capturing this spread.

    These traditional banks are the most sought after and the first choice of consumers as a traditional source of funds for purchasing a house or a car or even for those debtors who are looking to refinance their existing loan at a more favorable rate of interest to reduce their monthly payments.

    Credit Unions
    A credit union is a cooperative institution. This is controlled by its members. These members are the people that use the services of this institution. Usually, credit unions tend to include their members that belong to a particular group, organization or community.
    The credit unions typically offer many of their services that are more or less similar to traditional banks. However, the credit unions are typically nonprofit enterprises which is why they offer the same loan products as the banks but at a much lower price.
    • This makes them more favorable options than traditional banks and other commercial financial institutions.
    • Apart from that, there are certain fees such as the transaction or lending application fees that may be low making their loan products much cheaper an option than the traditional banks.

    However, there is a significant downside to borrowing money from these credit unions. This is that a few of these credit unions may offer only plain vanilla loans and do not provide the variety of loan products that some of the bigger traditional banks do.

    Peer-to-Peer lending
    P2P or peer-to-peer lending is another popular source you can try out which is also known as social lending or crowdlending. This is a method of financing that enables the individuals to borrow or even lend money without the help of any official financial institution in between acting as an intermediary.
    Through peer to peer lending removes the middleman from the process, it, however, has some other issues that may make it an unfavorable option for you. these issues are:
    • More time
    • More effort and
    • More risk as compared to any other brick-and-mortar lender.
    With peer-to-peer lending, the borrowers usually receive their money from individual investors who are willing to lend their own money for an interest rate agreed upon.
    The peer-to-peer online platform links the borrowers with the lenders displaying their profiles on these sites. The investors assess these profiles to determine whether or not they want to risk their money by extending a loan to a specific borrower.

    401(k) Plans
    Along with the comparable lending options mentioned above, there are also other sources from where you can borrow money such as:
    • 403(b)
    • 457 or a
    • 401(k) plans.
    These are actually the sources that allow the employees to invest money on a specific plan on a tax-deferred basis. The primary purpose of these accounts is to provide money for the retirement of an individual. However, you should borrow from these sources as you last resort for financing.

    In this type of source, the money that you borrow is actually the money that you have contributed to the plan. That means technically you are borrowing your money only. It is, for this reason, there are no underwriting or application fees involved in such types of borrowings. 

    However, when you withdraw from such sources make sure that you consider the tax consequences. This is because a permanent withdrawal will incur a tax as well as a 10% penalty on your withdrawal if you are under 59.5 years old.

    Lastly, you can also borrow money using your credit cards but make sure that you are ready to pay a high rate of interest. If you are a brokerage customer, you can also borrow from margin accounts especially if you want to invest in securities. 

    There are also several public agencies and financing companies to borrow money but the bottom line is to analyze the pros and cons of each and then go ahead with it.
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