The difference between small loan companies and bank loans
First, the application threshold is different.
For banks, good credit is necessary, stable income is considerable, and it is also an indispensable threshold for application. In order to ensure the authenticity of the borrower's income, the bank only accepts people who pay by punching cards and can provide the bank with running water.
As a supplement to banks, small loan companies open their doors to most people who are rejected by banks. For example, low-income wage earners or people who can save their wages for more than six months although they receive their wages in cash. But they basically won't lend money to people who have been seriously overdue for two years. But if you can provide collateral, some small loan companies are another matter, or you can make an exception and help you fill the funding gap.
Second, the loan cost is different (interest)
Small loan companies have a high risk rate, and high risk often means high handling fees. Compared with bank loans, people who borrow from small loan companies often have to pay higher loan costs, that is, loan interest. The expected annualized interest rate of small loan companies is naturally higher than that of commercial banks.
Third, the lending speed is different.
Banks will evaluate the applicants in many aspects, so the lending speed will be slow, while small loan companies will easily get loans in a short time because of their loose application conditions and relatively simple review process. Therefore, in addition to people with limited personal qualifications, people who are in urgent need of money can also turn to microfinance companies for help.