Finance Companies and Their Advantages Over Banks

A couple finalizing their loan payment

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What are the advantages of finance companies over banks?

  1. Finance companies give options to those with poor credit
  2. They provide flexible loan terms
  3. There are varieties of loan products being offered

Securing a loan is not the easiest thing to do. One thing that makes it difficult is the many different loan providers that can make it hard for you to choose which one to go for. On top of that, you’re going to have to choose between banks and finance companies. Do you know which one is better? There can be many possible answers to this, but here’s the most practical one: the better loan provider is the one who will approve your application.

If you want to understand what a finance company in the Philippines like Asialink Finance Corporation can do for you, continue reading.

Finance Companies Give Options To Those With Poor Credit

A couple having problems paying their bills

The reason why a finance company can be better than a bank is that the former gives loan options to those with poor credit. The reason for this is multi-faceted, but to put it simply, finance companies’ main way of generating revenue is through loans. Without giving people loans and regaining the money with interest, they simply cannot thrive as a business.

Having said that, don’t get the idea that anyone can be approved if they apply for one. Credit score and history are still important, but, there is something finance companies value a lot more than credit: collateral. Are you a person with bad credit? Do you have a valuable asset that you can put up as collateral? Then applying for a finance company can be greatly beneficial for you.

For example, funding your child’s education is possible even if you have no credit history or bad credit — as long as you have an asset to put up for collateral. If you have a tricycle, jeep, taxi, or truck then finance companies allow you to utilize them to help you pay for tuition fees through a collateral loan.

They Provide Flexible Loan Terms

A young woman paying her loan payments online

Besides offering higher terms compared to banks, commercial finance companies are also more flexible. This is especially true for the amount being loaned and the payment length as well as the payment schedule.

When it comes to the amount being loaned, a stronger asset can result in a bigger amount. This is because finance companies recognize that they can easily recoup their losses by ‘liquidating’ the collateral you put up.

Meanwhile, many finance companies have grown successfully over the years thanks to their flexibility in loan repayment schedules. The common practice for banks is to require a seven-year timeline on most term loans and 15 to 20-year schedules for commercial real estate.

On the other hand, finance companies can extend their payment schedules for up to 10 years for term loans and 25 years for commercial real estate. Even in terms of specific payment dates, you can often see some finance companies adjust to a day earlier or later when collecting your payment. For example, you could be asked to pay your bill on the 24th on one day while on the 23rd the next.

Don’t forget that the longer your loan is, the easier it is to manage. It does, however, come at a cost: you will end up spending more on interest fees in the long run.

There Are Varieties Of Loan Products Being Offered

Representation of different types of loans

Aside from the flexible terms that finance companies provide, there is also a large variety of loan products available to you. While finance companies offer the same kind of loans that banks do, banks don’t necessarily offer the same kind of loans that finance companies do. This is to say that there are some loans you would only get from an established finance

Take a tricycle loan for example. Finance companies like Asialink Finance Corporation give you an opportunity to loan money by using your tricycle as collateral. This is also called collateral or secured loan because you are using an asset that you own as a form of security. As you’ve read above, this can be good enough on its own for you to borrow some much-needed cash. This is also possible for other vehicular assets such as taxis, PUVs, and PUJs. Most, if not all, banks do not offer people this kind of collateral loan, which is why finance companies are a valuable option if you need to loan money fast.

Key Takeaway

To be clear, there is no final answer to the question of whether you should choose a bank over a commercial finance company or vice-versa. Choosing the loan product that is easier to get only remains a logical decision if you have no way of obtaining the alternatives. If you have good credit and decent assets that you are comfortable with putting up as collateral, then choosing wouldn’t be hard for you in the first place.

The more important takeaway from all of this is that commercial finance companies are readily available to give you a loan should you need it e.g. buying your first house, financing your child’s education, or if you need money for an emergency. All that being said, if you are looking for one such finance company in the Philippines, Asialink Finance Corporation is one of the best choices. Apply now to get started.

Gab Doromal