Are you planning to get a loan? Due to digitalization, nowadays, many lenders started providing online loans, which are easy and convenient for people. However, many people still like to get loans the traditional way, that is, through banks.
It is not bad to get a loan from a bank, though each lending way has its pros and cons. This article will briefly compare traditional bank loans and instant e-transfer loans in Canada. Let’s start by understanding more about them.
- What is a traditional Bank loan?
Traditional bank loans are provided by banks and are mostly taken for buying expensive items such as cars or houses. These loans can be secured or unsecured. Most people take secured loans as they tend to have lower interest rates and higher borrowing limits.
- Secured loan
When you take a loan and give something as collateral to secure your borrowings, they are known as secured loans. If you make a default or couldn’t make the complete payment, the bank has the right to sell your collateral to get the full money in return.
- Unsecured loan
When you take a loan without offering collateral, it is known as an unsecured loan. As bank bears the risk of faulty payments, they charge a high interest on unsecured loans.
- Secured loan
- What is an e-transfer loan?
E-transfer loans are a new way to take loans without visiting the lender’s office or submitting any identity proofs or bank statements for verification. The complete process to take an online loan is convenient and simple. You don’t have to stand in queues, no need to send documents for verification. Moreover, the money is e-transferred to your bank account once your application is approved.
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Difference between e-Transfer and Traditional Bank Loan
- Application process: The application process to get an e-transfer loan is simple. The whole concept of this loan is to facilitate quick transactions and provide immediate loans to people in urgent need. Therefore you can apply for a loan by submitting the application form available on their website. You don’t need to visit any office or send any documents for verification.
- Security: The online lenders use the IBV facility to look into your bank account and verify your application. The IBV facility is a secure way through which lenders can only look at your transactions. They do so to check your payment history and credibility. The use of the IBV facility eliminated the need to send id proofs and bank statements to the lender, which automatically reduced the probability of misplacement of documents and identity theft.
- Verification: Online lenders offer quick verification. This means, that as soon as you submit the documents, they will go to the manager in charge. They will check your details and contact you for final verification. The final verification can be telephonic or via email, which you need to e-sign and resend.
- Interest rate: The loans offered by online lenders are for short terms. Thus, they have a high-interest rate. Although, the rate varies from lender to lender. Instant e-transfer loans are viable for instant help and emergencies.
- Duration: Online lenders offer short-term loans, ranging from a few months to a few years at a fixed interest rate.
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Traditional Bank loan
- Application process: To apply for a bank loan, you need to visit a bank and start your loan application process after talking to an agent. They will provide you with a form, which you have to fill out and submit with them. After that, you need to wait days to get approval on your form. After that, they check your details and credit report and provide you with a loan only if you have a good or fair credit score. Though, the process is quite slow because of which people refer to banks only if they want to take long-term loans.
- Security: The process is secure and safe. The documents you give for verification stay with the bank. However, banks have several similar documents, increasing the chances of documents misplacement, which is a common issue in banks.
- Verification: You need to submit your id proofs, address proofs, credit report, collateral (if required), and bank details for the verification process. Once you submit it, the loan officer will check your file and approve or reject it. This process may take from a couple of days to a week.
- Interest rate: The interest rate provided by banks are lower than any other form of a loan. Usually, the loans are offered for a longer duration. If you are applying for a secured loan, you can get a lower interest rate.
- Duration: The traditional loans are offered for a long term, usually lasting between 5 to 30 years. In addition, they provide you with various payback options from which you can choose the most appropriate ones.
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Based on the above descriptions, both are good options. However, when it comes to fundamental differences, the main factor remains the reason why a person would need them. For example, a person who was having a normal life suddenly had a short car accident in which he broke his car headlamp, and he currently doesn’t have enough money to fix it.
Here, that person can take an instant e-transfer loan from an online lender because he has an immediate need for money and cannot afford to wait long durations.
On the other hand, traditional loans are viable if you want to buy expensive items for which you can take a long-term loan and payback with easy monthly instalments. Their low-interest rate makes them a good option for long-term payments, but they have a long application process.
An E-transfer loan is suitable to meet your immediate needs, whereas traditional loans are more for long-term needs. Therefore, based on your requirements, you can choose the perfect type of loan for yourself.
To get an instant online loan, there are several online lenders in Canada who can provide you with instant e-transfer loans.