The question seems to give an idea like you have to be extra wary about online loans. Is there something wrong with applying for online loans?
There is nothing wrong with applying for online loans unless you know what you are doing. The danger here is getting into the game without knowing the rules first. Online loans are similar to your regular loans. However, most of its offers are short-term loans, such as the payday loans. A payday loan is the most common type of online loan availed by borrowers. The reason for this is because it is more convenient to apply for a loan online rather than visit the lending company. What’s more, since these online loans offer payday loans, it is easy to acquire your money – in just a matter of minutes. Also, most online loans are unsecured loans – wherein it doesn’t require the borrower to present their credit history or credit score to avail the loan. They are only identified according to their ability to pay back the loan, which is done by the lender.
The Benefits and Drawbacks of Online Lenders
Major online lenders strictly do their business online. Names like Earnest, Upstart and Lending Club, are three of the names that do not have any physical offices, but they offer the biggest advantage of convenience to borrowers. While both offline and online lenders sometimes allow you to submit your application online, the former needs the borrower to sign the documents at the physical branch. There is no need to do this with online lenders since the entire process is done online.
Some borrowers are hesitant to submit their personal information online, but offline lenders also input the borrower’s personal data into their online database. When you choose an online lender, make sure that you pick one with a reputable name. Find reviews of the lender and see to it that they have a good rap among their borrowers. Search for complaints that are filed against them and see whether or not they have settled it. You should also check out their name if it exists in the Better Business Bureau and also search for stories regarding the lender.
It is important that you share your personal information such as your employer’s information, outstanding loans, and income with any lender. However, it is to be dealt with care, but not to the point that you have to get scared about applying for it.
Another great benefit of applying for online loans is the absence of sales pitch. When you are out looking for a loan at a bank and inquire about it, they might try to sell you other financial products. Online lenders are only focused on lending, nothing else.
The ability of online lenders to provide loans in every state is one of its drawbacks. It means that if you live either in Iowa or Idaho, you cannot borrow or get any loan using Lending Club. There are also some lenders that charge fees when your loan gets approved.