Big Banks Against Small Town Lenders

Developed Economies

The whole financial system in any country in the World revolves around its top ten banks.
Sadly the top 20 countries virtually control/maneuver to gobble down more than 80 percent of the world production.

In these top 20 developed countries out of approximately 200 independent nations on planet Earth less than 8 percent of the transaction are cash transaction. That means rest of the 92% financial transaction somehow get routed thru these top ten Banks in a typical developed economy.

Even if a borrower is dealing with a small agent still h/er transaction finally is being somehow routed by one of these top ten Banks in the country. Therefore when it comes to borrowing these is no such thing as Mom and Pop Shop.

Unavoidable Evils

Borrowing money often comes with primarily two hidden drawbacks,
Most lenders may either charge you a up from loan processing fee that could go up to 5% of the money being loaned or hit you with a prepayment penalty that can again go up to 5% of the outstanding Loan amount.

One can certainly negotiate a loan processing fee as you are still shopping for a loan but there is no way to avoid the hidden prepayment penalty as it is always printed in fine prints.


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Cost Of Borrowing

High Loan APRs may sound like lenders taking advantage of the borrowers week situation but in fact the same lender may offer surprisingly low APR if the borrower were to borrow under another category. The simple most example is the same lender may offer you perhaps the same amount of money say $10,000:

• For a Car at 3% APR
• For a House at 6% APR
• For a Loan collateralized by a cash CD at 8%
• For a Credit Card for 14% APR
• For a totally unsecured Line Of Credit for 28% APR.

Infact these above actual APR numbers are for Citigroup one of the largest financial institution in the world. Citigroup typically operated thru small mom and Pop agents ( Primerica or CitiFinancial or One Main Financial etc) across the World that deceptively seem to be their own office or branches.

My Typical Two Cents

Always first try to borrow from your lending institution where you direct paycheck is deposited.

Never run away from a financial institution if you are not in a position to pay back in time. Your financial institution has great experience in dealing with you cash crisis situation as they have loaned money to a very large customers like you.

Typically at best deal with TWO financial institutions out of which one should be the Bank where you have your direct deposit paycheck deposited. Short term payday loans or emergency loans outside of your regular main Bank should be your only second source of borrowing if that is in evitable.

My name is Chris Smith and I work i finance. While working in this domain for the last four years I have encountered many people with money problems. One of my goals is to help people make smart decisions when money is an issue.

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