Negosentro.com | Whether you are interested in buying a home, purchasing a vehicle, or are making a large payment of anytime type, you need to consider how you will finance the expense. Banks can offer many different financing options but it is also important to know which options you have available aside from your bank.
Peer-to-Peer Lending (Online Lending)
One way to finance an expense is from Peer-to-Peer Lending. Peer-to-Peer lending is exactly what it sounds like, your peers are the ones who are financing the purchase for you instead of the bank. An online service will help match lenders to borrowers Peer to peer lending can be significantly more expensive if you don’t have good credit because the peer is taking on all of the risk if you default on the loan and don’t pay it back. There a number of different platforms that this type of lending can found on.
If you have a short term expense that you will be able to pay back in a short amount of time, a credit card may be a viable option instead of taking a loan from a bank. Some credit cards offer a period of 0% interest after you open them. Beware that if you don’t pay off the balance in full before it is due, the interest rate on credit cards is extremely high. The standard credit card has an interest rate of 20% of the unpaid balance. Therefore, a credit card can be an excellent financing option only if you can pay the balance in full before the balance is due and the interest is applied.
If you are interested in financing a large expense such as going to college, conducting a research project, starting a non-profit, or even starting a business, you could apply for a grant to fund your expense. The United States government gives billions of dollars worth of grants every year to those who are eligible. Other grants can be earned by applying through organizations or businesses. Grants are a difficult form of financing to secure since it is time-consuming to apply for one, and there are many applicants. Despite being difficult to acquire, you should still search for and apply for any grants that you are eligible for. Some people refer to grants as free money since you don’t have to pay back the money that is financing your expense.
Micro-lending is a form of financing that is used by many small businesses for different expenses that they have as they are starting out. Micro-lending serves the purpose to help small businesses grow and develop, rather than focusing on the profit. The types of loans can be as small as $25 and can also be as much as $50,000. Generally, microloans are for businesses that don’t have access to other forms of financing so it is a common form of financing in developing countries, but not as common in the United States.
If you are a business owner and are looking for a way to finance upcoming expenses, a purchase order may be an option. A purchase order is where a purchase order lender sends the funds directly to the supplier in order to provide the product to the customer. The customer will pay the supplier for the product and your business will get paid from the supplier. The downside to a purchase order is that is cuts down on your profits because the lender and supplier both deduct fees.
Another way to secure financing from an angel investor. Angel investors usually only help to fund start-up companies that have the potential for extreme growth or profits. The angel investor will provide you capital in exchange for equity in your company.
One more option to finance a large expense outside of your bank is through Crowdfunding. Crowdfunding is a website that allows you to list how much money you need and the reason you need it, and the people can help fund your expense. Worth mentioning, only around 10% of crowdfunding campaigns meet their target, so it isn’t a sure option.
Overall, there are a number of different ways to obtain financing for different expenses aside from your bank. For example, if you are considering purchasing a home, visit no1propertyguide.com.au/ as it helps clients find low or no deposit packages and it also finds competitive rates. Depending on your particular situation, certain options may be more applicable than others.