The various advantages and disadvantages of using a regulated
lender can be laid down as follows:
Advantages:
- The banks are highly regulated by the central bank of the
country and thus, they offer security to the borrower and
depositor.
- Banks have wide range of schemes for its borrowers, which allow
borrowers to get credit with ease and without hassle.
- The rate of interest is usually low and is directly linked with
the monetary policy of the central bank and hence impact on rate is
also visible from time to time. Such is not possible with any other
private lender or institutions.
- Credit unions are non profits and thus they does not aim for
higher rate of interest or unjustified fees from its
customers.
- Customers are the owners of a credit union
Disadvantages:
- Banks usually have stricter rules as well as regulations for
lending and thus needy borrower may not be able to get the
necessary funds until rules are met.
- Cost of taking loan is higher from the bank, bank passes its
overhead costs to customers.
- Credit unions does not have access to latest technologies and
thus services may not be of high quality as compared to other
private lenders or banks.
- The ATM's of credit unions are less in numbers.