How to get a loan from a private person without collateral and guarantors: the pros and cons of this type of lending

The pros and cons of this type of lending

Due to the tightening of lending by banks, and this is especially pronounced during periods of economic crises, pandemics or political fluctuations, potential borrowers monitor the market and sometimes resort to the services of private investors.

Advantages of obtaining a loan from a private person without collateral:

• There is no impact on the credit rating, because the individual does not enter this data into the credit bureaus.
• Fast loan application approval.
• The terms of the contract are very flexible, because it is possible to change it privately if both parties agree.
• No hidden fees, insurance, paperwork
• Large credits are provided on the card.

Disadvantages:

• Where there is money, there are always scammers who pretend to be private investors and demand an advance payment, arguing that your loan in new MFIs will then be 100% approved, and then they simply disappear.
• Very short terms and loan amounts.
• High interest rates on this loan.
• There are various kinds of typos in the contract that the lender has the right to change the terms of the contract unilaterally.
• There is no regulator controlling the actions of both the lender and the lender.
• Very inconvenient ways to repay a loan, often the amount is returned only in cash from hand to hand.
• The potential financial and legal danger of such loans for both parties, because such a person is not legally registered as a business entity, respectively, such activities are illegal.

In the last couple of years, during the rapid development of the microcredit market and the emergence of microfinance organizations, we believe that it is best to use their services and not take a loan from a private person without collateral.

Lending in a microfinance organization as an alternative to a loan from a private person without collateral

A microfinance organization is a legal business entity that is regulated by a national bank. The main essence of the work of such an organization is the provision of loans to the population on legal grounds.

That is, it is legal and regulated by the national bank. Yes, a record of your loan will go to the credit bureau, but as practice shows when paying off on time, this will play more positively in the future if you need a large loan from a bank, for example.

Benefits of an MFI loan include:

1. The possibility of taking a loan 24/7 around the clock.
2. All you need is a passport, a code and a bank card.
3. Personal account with transparent conditions and the possibility of convenient repayment of such a loan.
4. Presence of a regulator represented by the national bank.
5. Possibility to add positive records to credit bureaus.
6. The ability to take a loan without a call from the operator

In general, whether to take a loan from a private person without collateral is up to you, but carefully analyze the pros and cons before taking such a step.

On our Maxbank website, you can select and sort the offers you are interested in according to various parameters, all loan offers of existing MFIs are collected on our pages.