Bank: Sources of Credit

and so forth.

Most common of these sources are banks. Banks are seen everyday in every corner everywhere. Apart from many functions and services of banks, they have been also known worldwide to provide different credit lines, termed also as loan, to their consumers. Banks cater credit or loan from their own resources, or from sources that they borrow, or create. As such almost all borrowers have known banks as the ultimate provider of all types of loan for whatever purpose.

Whether it is for the purchase of house, a lot, car, financing of personal expenses, and anything, name it, banks have everything in store for everyone’s need. Banks offer almost the same kinds of loan.

These loans consisted but not limited to car loans, housing loan, business loan, and other loans depending on the need of the borrower. Different banks may be offering same kind of loan products to its consumers. However these products differ from bank to bank in the way they are presented, advertised, and commercialized. Also, payment methods, interest rates, product characteristics, application requirements for the loan varies for every bank.

That is why the competition among banks with regards to providing loans to borrowers has become more intense due to interest rates comparison, customer service, approval time, leniency, types of documents to be submitted and others. Due to this healthy competition among banks, consumers and or borrowers, have the power of freedom to choose among them. Since consumers are foremost receivers of the benefits of bank’s competition, the borrower enjoys the lending process. Both are benefited, hence a mutual relationship between banks and borrowers.

Banks offer almost all promotions they can think just for borrowers to choose them as their lender. One of the offers banks give to entice borrowers is the shortened approval period. That is instead of the normal 5 days for example; it would be shortened to only 3 days. Another is discount on interest rates, if you get a loan for a specific limited period of time. One more, is when borrowers receive items once the loan is approved. There are many more promotions, depends on the bank, whichever they think could click on the market.

However, the number of bad loans in the country has been continuously increasing not only to banks but to other financial institutions as well. Thus making banks more thorough in their credit analysis and investigations. In as much as they want to cater to every borrower, banks have to impose strict regulations, complete documentations, and proper credit ratings to ensure return of funds lent to borrowers.