Among other things, in the process of refinancing loans, banks lure solvent customers from other banks. Therefore, refinancing conditions among other credit products tend to be of particular benefit to bank customers.
Conditions for refinancing a loan with banks
The positive side of refinancing of loans in online banks is:
- Possibility of lending to rather large sums of money: up to 30 – 50 thousand dollars without income certificates, up to 100 – 200 thousand dollars with income statement, but without property collateral, and in the presence of property collateral – and for a larger sum .
- Loan refinancing conditions for loans, both in interest rates and in terms of lending.
- Bank clerks are likely to deal with debt repayment on the old loan and its complete closure.
But at the same time, the conditions for refinancing loans from banks are very stringent, and far from available to borrowers. For example:
- Banks tend to only lend to solvent borrowers. If the applicant’s credit history is flawed and there is a late payment on the available loans, such a bank client will probably be denied credit.
- During the review of the application for refinancing of the loan at banks, the applicant is strengthened to check the solvency, which may take up to 2-3 days. Therefore, subject to the appeal to the bank, the issues of promptness of borrowing money go into the background.
- To refinance a loan through a bank, you will need to collect and provide a sufficiently broad list of documents:
– identification: passport, IDN card; for small businesses – a certificate of state registration, documents confirming ownership;
– confirm solvency: certificate of income (six months, one year) from the place of work, tax inspection, social security body; for small businesses – financial and tax statements for a two-year period, statement of account for a year;
– Documents for valid (declared for refinancing) loans: credit agreements, all annexes thereto, receipts for payment of regular payments, certificates of debt.
After all, bank refinancing is not available to all bank clients. And only to those borrowers who:
A) are fully solvent and capable of servicing the new refinancing loan in full, regardless of temporary difficulties and the size of the cash gap;
B) are financially disciplined and have no significant delays in payments on previously taken loans (have a positive credit history);
C) have the time and patience to go through the whole difficult refinancing loan banking process.
And what to do to other borrowers who at one time did not have the perfect credit history, or who need money for lending very urgently? Faster than can be obtained through the bank?
Quick refinancing of a loan through micro finance organizations
Fortunately, you can refinance your loan online through another specialized microfinance organization. However, a number of features indicate that the micro finance organization option is ideal for lending in cases of temporary, short-term cash gaps, or in emergencies. A number of objective factors push this conclusion:
A) Factors that indicate the benefits of refinancing micro finance organization loans over banks :
- The high availability of micro finance organization loans for a wide range of individuals and legal entities, including those with “corrupted” credit histories of BFIs, as well as the ongoing problems of confirming their solvency. The peculiarity of the IRF loan is that it is a shortened procedure, during which only a reliable identification of the borrower is carried out. While the verification of its solvency (with the provision of the entire package of supporting documents) in explicit form – is not carried out. If such verification is carried out by micro finance organization software (on available electronic client bases), then the peculiarities of its conduct and methodology are a trade secret of the financial company.
- Very high speed of obtaining refinancing of credit through micro finance organizations. For example, it takes about half an hour from the time you apply for a loan with an micro finance organization to transfer money to an electronic bank card (getting the borrower full control over the loan amount). Such high speed of credit operations, when dealing with classic banks, is simply unattainable! “Fast money” is especially required when refinancing loans from individuals, other companies and non-financial organizations. Because late payment of debt in areas with close interpersonal relationships can lead to catastrophic consequences in terms of undermining the goodwill, which later you will not buy and recover.
B) Factors that negatively affect the attractiveness of refinancing micro finance organizations:
- The relatively small amounts of micro finance organization loans require several microfinance companies to apply for a large amount of lending at the same time. Thus, with the help of a micro finance organization refinancing loan, the task of consolidating several old loans into one new loan is unlikely to be solved.
- Increased interest rates on micro finance organizations ‘credit products, which make them less financially viable than banks’ credit products. This factor encourages the refinancing of loans with micro finance organizations services only for short periods of time, to obtain better terms at another banking institution, or to improve the credit history of BFIs.
- The actual refinancing of loans, that is, the payment of debt for the complete “closing” of old loans (loans), at the expense of the micro finance organization loan received, will have to deal with the borrower.