The major difference between a financing company and a bank is that you cannot make any deposits in the former one. Both the entities let you borrow money for various ventures. But taking a loan from a financing company is actually better for the following reasons.
Competitive rates of interest
If you shop around you will find that many non-banking financial institutions are offering loan at similar interest rates like the banks. Some of them are even offering lower rates than that of banks.
Flexible terms and quick processing
Banks have strict policies regarding a loan that must be followed. The terms and conditions of loan taken from a financing company are much relaxed. The loan processing is less complex. It also takes less time to sanction your loan. You have flexible terms, so paying back the loan is also easy.
You can get loan with even with poor credit score
Banks won’t give you a loan unless your credit score is high. Typically, you will need a credit score of 600 to 650 to get a loan sanctioned from a bank. But a financing company can give you a loan at a lower credit score.
The popularity of financing institutions is going as they lend you money on easy terms. More people are borrowing money to start a new business or buy a vehicle. In the past, the interest rate offered by these institutions was high. But now, they are offering competitive interest rates making them a better choice than banks when it comes to borrowing money.