A common question people ask is whether a bank is always a lender. In order to answer this question, we’ll first walk through what a lender is and how/where to find one. Choosing a lending institution or lending company is a big decision that could have a major impact on your interest rate, loan terms, and likelihood for approval. Get the facts before applying.

First off, let’s define what a lender is. A lender is often a financial institution (though they can sometimes be organizations, pawnshops, your peers, etc.) that offers to loan money in exchange for a promise that you will pay your loan back. Depending on whether your loan is secured or unsecured, a lender may be able to seize your home/car or garnish your wages should you default on your loan.

You must first apply to receive a personal loan. Once approved, you’ll work with the lender to determine what the terms of your loan are–amount to be borrowed, interest rate, repayment period, etc. During this stage, the lender will also go over what happens should you fail to make your payments.

While a mortgage lender may need your bank statements to prove that you’ll be able to make payments on your home, this is not something that’s typically required for a personal loan. Other documents that may be collected to determine your eligibility for a loan are:

• Outstanding debts such as other loans
• Foreclosures
• Past bankruptcy
• Tax liens and civil judgments
• Unpaid collections accounts
• Delinquent accounts

All of these documents help the lender determine how much risk they would be taking on if they were to lend you money. The more dings you have with past institutions, the less likely you are to get approved.

There are a few different types of loans you can apply for, which will determine which institution you can borrow from.

One of these options is mortgage bankers and brokers. A broker helps you shop for the best mortgage rates and terms available, though this may come with a processing or origination fee. A mortgage banker is a large institution that has the funds to originate loans and create pools of loans.

A direct lender loan is when money is borrowed directly from the lender (ie: banks and credit unions). Their rates will be similar to a mortgage banker or broker, but you won’t have to pay a portion of the transaction like you would with a broker.

Secondary market lenders assist the national mortgage market by making it easy for money to move across state lines. This ensures there aren’t isolated pockets where mortgages aren’t available. Accountability comes in the form of regulations and guidelines that are in the best interest of the general public.

YES! There are a ton of lending options out there that don’t require a bank and can help you out if you need money. Online options have made it easier than ever for people from all over the country to borrow money from their peers or from companies that specialize in personal loans.

Peer-to-peer lending (P2P), for example, lets borrowers obtain loans from individual investors or fund groups. You can get money in the bank within seconds–all online. There are even larger banks that have built their own online lending product to provide customers with better interest rates. Lending is changing every day, so search around on the internet to see all the options out there.

Helix by Bank of Orrick is helping people across the nation get the money they need by offering online personal loans. If you have any further questions about the relationship between banks and borrowers, or how banks lend, feel free to reach out to our helpful customer support team. We’d be happy to answer any questions you may have.