Typically there are two ways of getting a loan that is, directly and indirectly. Here, directly implies direct from the lender. On the other hand, indirectly implies through intermediary that is, such as a dealer or a broker. Although taking the services of an intermediary increase the cost of your loan, they are useful to many because they make the task of locating a lender very easy since they have the expertise and a large database of lender.
The physical lenders include banks, financial institutions, building societies, credit unions and so on. Online lenders are also direct source of finance. The third source of finance is the intermediaries, who are usually dealers.
Loans provided by dealerships usually do not come with very advantageous loan terms and thus end up being more expensive than other car loans provided by banks and financial institutions. This is due to the fact that dealerships are not specialized on loans and thus are only intermediaries adding additional costs to the loan process. Moreover, loans provided by dealers are pre-defined and cannot be customized for the benefit of the borrower. For example, if you have a home you can take a secured loan against it from a bank, but this is not possible with a dealership financing.
There are also several common types of intermediary financing, which you can explore. The first source you should consider is your own savings and investments. You can also find a type of investors called angel investors. These are rich individuals who provide capital for a business start-up, usually in exchange for ownership equity. Since most of these investors are retired business owners and executives, they can also provide valuable management advice and important contacts.
Peer-to-peer lending is a means by which borrowers and lenders may transact business without the traditional intermediaries, such as banks. It can also be known as social Lending, ordinary people lending money. The internet can be used for connecting borrowers with lenders, through an auction-like process in which the borrower accepts the lender willing to provide the lowest interest rate.
You can also explore the possibility of borrowing smaller sums from family members, relatives, friends, or colleagues. However, make sure that the money is paid back in time to avoid any strain in personal relationship. Credit cards are another source of intermediary loans. These cards enable you to make purchases or obtain cash advances and pay them at a later time. But as a long-term financing method, they can be expensive.
There are also private lenders who are ready to offer you a loan at higher rates of interest than a bank with out collateral. These lenders avail loan from traditional banks at lower rates and then lend the money to needy persons at a higher interest. However, such intermediary sources of finance are not only very costly but also risky because if you do not pay up the repayment installments in time for make defaults the lenders can turn really nasty and may physically try to harm you or your family to get back the money.
After everything said and considered, the best and trouble free way of financing your need is to borrow from your savings bank or fixed deposit account. For this is to happen you need to cultivate a habit of saving and keep a nest of eggs for your future needs. If this is not possible, then you have little option but to deal with a bank or an intermediary for a loan.
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