There are many more banks in the country than commercial banks, and yet often when it is time to take out a loan (especially a mortgage), we do not think about financing it in such an institution. We think instinctively that large and well-known commercial banks are safer and the loans they offer are more profitable. Can a loan from a bank actually compete with credit from a commercial bank? How to get a loan from a bank?
What are banks?
Most people associate such a concept as banks, but in practice they do not quite know what it actually means. Then what are banks? These are financial institutions with the following characteristics:
- The most important goal is not to make the most profit
- range is limited
- Simple offers without unnecessary additions.
The ultimate goal of commercial banks is, as the name implies, to generate as much revenue as possible. Of course, there is nothing wrong with this, but it means that not always a traditional bank loan will be the most advantageous solution for the customer. banks do not prioritize the same level of profit, which allows them to adopt more customer-friendly policies on many issues. Why is this possible? While every commercial bank is a joint-stock company, which requires providing the highest profit to the auctioneers, banks are s that deal with banking activities, and are therefore subject to slightly different laws. They are also bound by the Banking Act, but they must also comply with the principles of law. The fact that the initial capital of banks comes directly from their members can be pleasant, so it is entirely capital, not associated with any foreign company.
What do banks offer?
It was mentioned that banks have a relatively limited product offer. What do they offer then? First of all, they are:
- cash and mortgage loans
- credit cards
- possibility of keeping an account.
Interestingly, however, some banks are moving with the times and are gradually expanding their activities, for example, with the storage of securities. There is a misconception that all banks are archaic and uncomfortable in modern times, especially for young people. In practice, however, the case looks quite different in many cases. For many banks, for example, the standard is already having an extensive mobile application.
Credit at a bank – conditions
We already know what banks are, so it’s time to consider the conditions of their loans. Since they do not work only for profits, it can be assumed that in many cases they will be more attractive than in the case of loans from commercial banks. In many cases this will be true. When it comes to credit at a bank, the conditions can vary significantly not only depending on the association, but also individually depending on the bank. Their employees also usually have greater freedom and room for maneuver in adapting to the needs and requirements of customers. When considering a loan at a bank, the interest rate is what we should first and foremost pay attention to.
There is a good chance that it will be smaller than in the case of a similar loan at commercial banks. This is especially important in the case of mortgage loans, where even a seemingly small margin reduction of 0.15% or 0.2% compared to commercial banks will make a considerable difference in the total cost of the loan (it can be even several thousand dollars).