With the rise and accessibility of the internet, financial establishments have dwelled online, extending their services to more people. Lending companies have vastly benefited from this, providing loans to individuals who want to borrow money online.
But what is the edge of borrowing from online lenders? What sets them apart from all the other lenders we know? And should you get a personal loan online? The following are the pros and cons of getting online personal loans or any loans in general.
There are several advantages to applying for a loan from online lenders. The following are the main benefits of doing so.
Faster Borrowing Process
Have you applied for a loan from a bank or credit union? How long did it take to get the money you borrowed eventually?
Typically, the time it takes to get a personal loan from banks or credit unions, from application to getting the negotiated borrowed money, is about three to several business days. It may vary if you want other assets such as vehicles.
On the other hand, online lenders can provide you with money in a shorter time than most traditional lenders. The typical time frame from application to getting the borrowed funds is about seven business days. It also depends on several factors, such as the type of loan, the terms of the website, and more.
If you do not have an immediate time limit to when you can get the money in your account, you can stick to your traditional lender, but if you need money in a certain amount of time, then online lenders are a great option.
Can Provide Loans for Bad Credit
If you have a bad or low credit score, you might have difficulty applying at traditional lenders. You may only be presented with limited options, most likely secured loans, where you need collateral to seal the deal.
Online lenders can provide more loan options for you. They tend to look not just at your credit score but also consider other factors like your income and debt-to-income ratio. Loans like cash advance loans, look more into your income for them to accept you.
Alternatively, you may also improve your credit score to get better deals from online lenders. It, in turn, can let you get even more of the offered loans by online lenders, such as unsecured loans, so that you don’t have to worry about collateral.
Perhaps the main selling point of online lenders is that you can transact conveniently. Unlike other traditional lenders, you don’t have to physically go to an office to communicate or pay off loans. It can be quickly done through an online payment. You may even have the option to autopay for extra convenience.
Assuming that you already have the needed requirements, you don’t have to go to their office for application and approval. Most of the time, you only need to go to their site to apply, create an account, and wait for emails confirming your approval, and eventually, a notification that you have received the money.
While they have their strengths, they may also show some disadvantages. Here are the possible cons to getting online loans.
Some Online Lenders Might Be Scams
Several online lending sites can be found on the internet. However, tread very carefully with these sites, as some operate illegally and are a scam. These are predators that can steal your money if you are not careful enough.
There are several ways to know if a lending site is a scam. Examples of these are the lender being unregistered in your state but still operating anyway. Another is when their website is not secured, and their contact details are unresponsive. They also do not have a physical address.
While this is true for many sites, there are still many lending websites that are legitimate and safe to transact. For example, sites like CreditNinja have a secure URL, a copy of their state licenses on display, and reviews on other review sites.
You can quickly identify which lending site is a scam by checking a few details, such as what they put on their website. See if their URL is secure (it should be https instead of http), check for a physical address, and see if they have reviews from other sites.