Alternative and Non-Traditional Lenders
An alternative lender, or non-traditional lender, is a loan provider, often a short-term loan lender that is often not heavily regulated by state or federal agencies. Alternative lenders can be financial, mortgage, or online lenders. Some lenders provide small amounts of cash relatively quickly, while others may loan large sums that take longer to be approved.
Non-traditional lenders that provide large sums of money usually require more documentation than traditional lenders. They may ask for extensive business and personal financial statements, as well as credit reports and business plans. To apply for a large alternative loan, individuals usually have to meet certain requirements: have proof of employment, be employed for a certain amount of time, and have bank statements for a specified time period (usually 12 months).
The interest rates of alternative loans also depend on whether the loan is secured or unsecured. Secured loans typically have lower interest rates than unsecured non-traditional loans because they minimize the lender’s risk of loss. Non-traditional lenders will also look at an applicant’s credit score and down payment on the loan to determine the interest rate. The better the credit score and the larger the down payment, the better interest rate an individual can obtain. The time period to repay a non-traditional loan also depends on the amount of funds provided. Individuals usually opt for short-term loans because it gives them enough time to improve their credit scores and get better loans.
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