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Money Lenders Beginner Guide

As a beginner, you may want to start by understanding the different rules of money lending and what you should expect on your first loan. The following is a brief explanation of the basics you need to know about money lenders.

money lender

Who is a Money Lender?

To understand the money lenders and how they work, you have to begin by understanding; who are the money lenders and why they lend money. Money lender is a general term used to refer to the different kinds of financial institutions and individuals who are in the business of lending money to the public for a profit. The money lenders business model is based on making a profit from the interest charged on the money they lend the borrowers. It is therefore important to understand money lenders is not a term that refers to banks and credit institutions only but even that family member who lends you some money to start your business.

List of Different Money Lenders

Money lenders may be categorized as either public or private money lenders or the following is a list of probable money lenders you can borrow from:

  • Banks
  • Microfinance institutions
  • Private Brokers
  • Credit unions
  • Pay day loan lenders
  • Small Business Organization
  • Friends and relatives

Interest Rates and Terms

Interest Rates

There are different types of loans that you can get from each of these money lenders and the type of loan will determine the interest charged on the loan. The interest rates are also based on the current economic environment in the country as well as the type of the borrower you are. The bad credit borrowers may often get tough terms and high interest rates on their loans.

money lenders

The government through the central bank also influences the interest rates of public money lenders but private money lenders may not be under the influence of the government and therefore may offer the worst interest rates to trap desperate borrowers. You should always approach the private money lenders for a loan if you understand their terms and they are favorable.

Repayment Terms

money lender

The repayment terms of each loan may vary depending on the lender. In most cases the loan repayment is done on a monthly basis and therefore spread across the 12 months of the year with cumulative interest on each month. The money borrowed may thus be spread out in 12 months, 24 months, 36 months up to 60 months or more depending on the amount borrowed. The basic logic about borrowing and interest is that the loner you take to repay the money from the money lender the higher the amount of interest that you will pay.

There may also be Money Lending Acts or monetary laws that govern how public money lending is carrying out in a given country. It important as beginner to learn on the existing money lending laws and what is legal and illegal in the money lending business. This will come in handy when you are in trouble with your money lender.

How to Get Your First Loan from a Money Lender

There are a number of qualifications that may be required for you to access credit from different money lenders. An example of eligibility requirements may include:

  • Be above 18 years of age
  • Be a citizen
  • Have a credit score of above 600

The most important of them all is your credit history, if this is your first time borrowing you may have a difficult time borrowing a large amount but with time if you make your repayments on time, you will build a credit history and get to borrow more.

money lender

Process of Borrowing from a Money Lender

The different money lenders may have different process for getting approval for a loan. The first step is obviously application of the loan; the money borrowers evaluates your credit worth and makes the decision on whether to led or deny you the credit. The process for instant loans may be fast than most of other loans, for banks it may take a longer period for approval of fast timers. If you are looking for a money lender who will offer you the loan you need quickly please contact us for further details.