If you need money and want to take out a loan, you can go to various places. We discuss the most common lenders here and tell you what the advantages and disadvantages are of the respective type of provider.
Option 1: 'Aunt Agate'
One of the most popular places to turn to for a loan remains 'Aunt Agate'. Obviously, this does not refer to a specific person: a so-called 'Aunt Agate' loan refers to a private loan (not to be confused with a personal loan!) From a family member or a close friend. Almost everyone has, recently or longer ago, borrowed some money from his or her parents. And also uncles, aunts or friends who have a little more to spend are often happy to lend a helping hand to someone they know well in times of need.
The advantage is of course that taking out a loan with friends or family is easy and usually you will not have to pay interest on the loan. A disadvantage, however, is that problems can sometimes arise. When you cannot pay back the money on time, or when the person who lent you the money suddenly needs extra money and wants the money back.
You can prevent the personal relationship from being under pressure by, for example, putting a few things on paper, by sticking to small loan amounts or by forgoing it entirely and still going to a commercial lender .
Option 2: The bank
Outside of your own family and circle of friends, the best-known lender is still the bank. Although many banks have not been so generous with lending out since the crisis, most people still go here first when they want to take out a loan for a renovation or the purchase of something valuable or when they are looking for a suitable mortgage.
The advantage of borrowing from your bank is that you can keep your finances in one place. That is clear and you may have a familiar feeling about your own bank. For example, banks are not in the news like some providers of payday loans and when you have complaints, you can relatively easily denounce the situation. There is a lot of know-how at a bank and you get extensive information.
A disadvantage of banks is that they are therefore less likely to approve a loan application than in the past. They will also want a lot of information on your part before making a decision and there is a chance that you can borrow a smaller amount than you want or that your application may even be rejected.
Option 3: Other lenders / private lenders
If you cannot or do not want to take out a loan from your family or the bank, there are numerous other lenders that you can turn to. These are usually private and specialized loan providers who derive their income from, among other things, the interest and borrowing costs that people pay on their loans.
There are lenders that you can only go to for small loan amounts up to a few hundred US dollars, but there are also providers that you can go to up to a few tons, depending on your ability to pay the loan.
The advantage of this enormous offer is that you can almost always get a loan somewhere, even if you have received zero filings at the bank. A disadvantage is that sometimes, especially with mini-loans or loans where no income check or BKR check is carried out, there can be higher interest rates or unfavorable loan conditions.
Now there are a lot of ghost stories about loan sharks, but you can rule out the risks by doing thorough research into the lender you have in mind. Search for experiences of other borrowers on the internet, check consumer websites for information, inquire about permits and check with an umbrella organization.