In general, an online loan is any loan that is not from a traditional bank and can only be obtained online. Online lenders are also categorised as alternative lenders since they provide alternative loan products from the ones that you can get from traditional banks.
Due to their ease of access and seemingly fast approval rate, more and more people are leaning towards online loans for financial needs. However, this is not to say that all online lending is reputable. After all, they have a little bit of a bad reputation, so some people don’t trust online lending. If you are hesitating, we could help you get that one little push you need. Here are some reasons why you should try out online lending.
They are Convenient
The trend in online lending nowadays is to make loans as easy and convenient as possible. That said, if you go for an online loan for the first time, you might be surprised at how easy it is to apply for a loan, how fast it can get approved, and how fast the money will go into your bank account.
It’s very unlike getting a loan from a traditional bank, where you need a lot of documents just to get your application out, a few weeks to get your application approved, and another few weeks to send the money. Not only that, but online loans also have lower interest rates and better repayment terms.
But you might wonder, “How do online lenders approve my application quickly?” It’s because online loans use alternative information to determine your creditworthiness. Usually, they look at your debt-to-income ratio, utility payment history, and social media accounts. Also, most online loans are unsecured, which can shorten your application.
They are Flexible
As mentioned earlier, online loans are an umbrella term. That means there are different types of online loans, like personal loans, mortgages, pawn loans, RV loans, etc. It shows that online loans are flexible and can cater to your financial needs. From big loans like mortgages to alternative ones like payday loans, personal loans, and second chance loans, there is one loan that you can find for whatever you need.
They are Safe
One of the most common issues that people have with online loans is that they think that online loans are unsafe. With that said, are online loans truly safe? The short answer is that online loans are safe when handled responsibly. Most horror stories you read about online loans usually only happen when the loan is handled inappropriately, like the person paying the loan late, defaulting, or being scammed.
With that in mind, there are people out there to get your money. These scammers pose as online lending companies and aim to get your bank information for identity theft. Also, some dubious online lenders want to put you in a debt spiral until they wrung you dry. However, note that these kinds of scams are just the minority.
Most online lenders you see online are reputable and have been approved by a governing body. However, it’s still up to you to check whether the online lending company is reputable and how you handle a loan. So, in short, online loans are safe as long as you do proper research.
As mentioned earlier, one of the conveniences of online loans is that they need few documents. Let’s expound on that, shall we? One of the most dreaded parts of dealing with a loan application in a traditional bank is the paperwork. Usually, you’d have to bring a folder full of documents to a physical location just to make your application.
If you somehow miss one, you’d have to bring all your stuff back to your house, find the missing document, and hurry up again to the location or try again tomorrow. However, online lending doesn’t need much paperwork. Usually, all you need is proof of billing and a valid ID. What’s the best part? You can scan and send them online and potentially have your money in a few days.
If you’re planning to get a loan from a traditional bank and the only day that you can do this is Friday, then you’d have to make some extra effort to finish your application within the day because if you can’t, you’d have to finish it on Monday or start over again. It’s a huge hassle, but luckily, you don’t have to hurry up in online lending since you all have the time in the world because online lending is available 24/7, even on holidays.
Convenience is the main reason why online lending is very popular nowadays. Not only are they fast and available 24/7, but their interest rates and repayment terms are also much more negotiable and outright better than what you can get from traditional banks. Let this be a wake-up call for you to try online loans today.