Lenders
Per Investopedia, a bank and a lender are both entities that provide loans to borrowers, but they have some differences in their functions, products, and regulations. Here are some of the main differences between them:
- A bank is a financial institution that offers a range of services, such as accepting deposits, issuing credit cards, and providing investment advice. A lender is a more general term that refers to any entity that lends money, such as a bank, a credit union, a mortgage company, or a peer-to-peer platform.
- A bank typically has stricter lending standards and regulations than a lender, as it is subject to federal compliance and reporting laws. A lender may have more flexible and lenient criteria for approving loans, especially for borrowers with low credit scores or unconventional income sources.
- A bank usually offers fewer loan options and products than a lender, as it focuses on the overall financial needs of its customers. A lender may specialize in a specific type of loan, such as a mortgage, a personal loan, or a student loan, and offer more variety and customization for different borrowers.
- A bank may sell your loan to another lender after closing, which means you will have to deal with a different entity for your loan servicing and payments. A lender may keep your loan in-house or sell it to another lender, depending on its business model and strategy.
- Both banks and mortgage lenders can help you get the funds you need to buy your home, as long as your credit, income, and debts meet their qualifications. But they each come with a unique set of pros and cons.
- Mortgage lenders usually offer a larger variety of loan options, and they can be more forgiving of borrowers with damaged credit. Banks typically have fewer loan options and stricter lending criteria.
