Individuals or legal entities that lend money
Individuals or legal entities that lend money to a borrower or debtor are creditors. The money is lent by deducting a commission and / or the agreed interest rate for completing the document or transaction. All payments, payment procedures and other terms and conditions are set out in the credit agreement. The creditor lends money to earn money, while the debtor borrows to pay the bills or fulfill his goals. Depending on your needs we can distinguish two types of creditors:
- Non – bank lenders – Lend relatively ssame day, but often in less than an hour.
- Banks – can lend a very large amount of funds (from a few tens to several hundred thousand or even millions). The speed of the money transfer depends on the type of loan you have chosen, the amount and your previous cooperation with the credit institution (it may take longer days).
When choosing a creditor, it should be borne in mind that non-bank lenders tend to have higher interest rates, especially on short-term loans. Borrowing for 1 month may require you to pay 10% of the loan amount or more. Special offers, which are usually limited to new customers and offer short-term interest-free borrowing, are more beneficial. Commercial banks offer lower interest rates and specialize mainly in long-term loans, but also offer credit cards, consumer loans and other financial services. When evaluating which offer is more advantageous, pay attention to the annual interest rate (gpl). This characteristic allows an objective comparison between different services and shows which is cheaper, provided that the same repayment period is chosen. For example, loans issued by non-bank credit companies will most often have a higher gpl than loans offered by credit institutions.
Long-term creditors – banks are willing to lend money for up to 20, 30 or even 40 years (when buying a home in installments). Conversely, non-bank lenders offer unsecured loans for up to 30 days, less frequently for one, two, three or four years. Choosing to borrow against a pledge can also qualify for a higher amount at non-bank lenders, but such offers are rare and not always financially profitable. Perhaps the best way to understand which lender offers the best terms is to understand your needs and then compare offers online. If necessary, you can also go to branches of your own and other banks and try to negotiate on-site borrowing conditions. It takes time, but it is possible that a personal conversation will lead to an offer that is not even offered on the Internet.
When borrowing money, keep in mind that creditors will always try to charge the highest interest rate and commission. Their goal is to earn and limit their appetite, largely only through national legislation and competition. Even in Latvia, before the change of laws, all creditors demanded significantly higher interest rates than at present. Even banks, which always try to position themselves as white and furry, calculated disproportionate fines, penalties and were clearly at the expense of debtors. In the absence of changes in the law, we can be sure that the interest would be the same as before, as lenders’ appetite is unstoppable. Statistics show that hundreds of thousands of people in Latvia are currently borrowing, and some of them are delaying loan payments. In most cases, this means additional costs for debtors and possibly less cooperation in the near future.