How often have you walked into a bank to
apply for a loan
over the last decade? If your answer is close to Never, then
that could be because of the convenience of getting loans
online. When time is of the essence during a financial
emergency, an
online loan
can be one of the quickest ways to get funds without even
stepping outside your house.
According to Finder's
personal loans statistics
updated as of March 08, 2021, there has been a rapid growth
in online lenders in the past year, with an additional
55.87% of borrowers claiming to use an online lender for a
personal loan in 2021 compared to 2020. The study also found
that people with poor credit are more inclined to borrow
online than from banks.
Despite all the statistics and that online loans can help
you get cash fast, the main challenge is to find the right
online loan lender. In this blog, we will help you do that.
Once you understand what online lending means and its
potential benefits, we'll share some smart tips that can
help you choose the best online lender or online lending
company.
What is Online Lending?
Today, almost everything is available online, and so are
loans from banks and other financial institutions. The loans
that provide you funds by carrying out the entire borrowing
process online are online loans. The term 'online lender' is
most often used to describe lenders who offer online loans
other than the traditional banks.
The process of borrowing and repaying a loan online from an
online lender is called online lending. Online lending was
born in the 1980s to speed up the lending process and help
the borrowers get cash quickly by applying from their homes.
Some online lending companies even claim to approve loans
sooner than it would take you to drive to their store
location. Despite the rise in popularity of online lending,
the offline lending method is still not considered obsolete.
Online Vs. Offline Lending - Which One Is Better?
Here's a quick differentiation between the online and
offline lending methods to help you get a clearer picture.
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Accessibility
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To get an instant personal loan online, you
can apply anytime from anywhere in the world
using a laptop or a loan app on your mobile.
Hence, these loans are considered one of the
best ways to get cash during emergencies.
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When you apply for a loan offline, your
application requires face-to-face interaction
with a loan officer, which can only occur
during the store location's working hours.
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Application Process
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The online loan application process can help
you save a lot of time. You can get all the
necessary information on the lender's website,
like eligibility criteria, documents required,
loan benefits, additional fees, prepayment
penalties, etc.
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Unlike online lending, applying for a personal
loan offline can take much longer than the
online loan application procedure. There could
be a lot of back and forth to get the
documents right, making the process quite
overwhelming and extensive.
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Ease of Comparison
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Comparing the loan requirements, APR, and
offers set by different lenders is much more
accessible online than offline..
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On the contrary, it's a long and laborious
task to visit each lender's branch locations
to compare their loan offerings.
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Loan Disbursement
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Online lending is famous for quick loan
approvals and getting the loan amount credited
directly to your bank account. This means you
don't have to wait for days.
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In the case of offline lending, the loan
disbursement process could take a little
longer if a particularly unscrupulous loan
officer gets involved..
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What Are The Pros And Cons Of Online Lending?
Before you check out the steps that can help you select an
online lending company, you should be well aware of the
benefits and risks of using the online method of lending.
Although the lending process may vary from one online lender
to another, we've jotted down some of the general pros and
cons of online lending:
Pros
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A relatively quick, efficient, and transparent application
process
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Considered an excellent option for people with no to low
credit scores
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Faster loan approvals, sometimes within minutes of
applying for the loan
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Easy loan disbursement and repayments through online
platforms and mobile apps.
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Most online lenders allow you to get pre-approved and
expedite the lending process
Cons
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Only accessible as long as there is any internet
connectivity
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Costly in terms of APR as compared to most of the
traditional banks
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Lack of face-to-face interaction when an online lender has
no physical locations
How To Choose An Online Lending Company?
Selecting a good online loan company is imperative because
you trust and provide your bank details and other essential
information to get a loan. In addition, the continuous
occurrence of scams and frauds in the financial space makes
it even more critical for you to do some initial research on
potential online lenders.
When selecting an excellent online lending company, you
should look for certain qualities and factors. To make your
task simpler, we've developed a handy guide on how to
identify a safe and reliable online loan company:
1. Pay Close Attention To Loan Details:
An excellent online loans company's first and foremost
quality is to provide clear and detailed information
relating to all their loan products on the website.
Moreover, online lenders are expected to disclose all the
information, especially relating to any hidden fees, that
you as a borrower will need to make an informed decision.
Doing this will help make the application process simpler
and easier for you.
2. Carefully Inspect The Website:
There are a couple of ways by which you can check an online
lender's website. One way to do this is through
WHOIS. You will have to add the lender's website on the WHOIS
portal, and it will give you results relating to who owns
the site and how long the site has been live within seconds.
You can use this information to know how old the
organization is and dozens of other statistics that can help
you judge the lender better.
3. Search For A Physical Location:
Although online lending aims to facilitate borrowing and
repayment of funds through online services, it's better to
choose an online lender with at least one brick-and-mortar
store displayed on their website. This can be helpful when
you need funds urgently and have no internet connection. For
instance, CASH 1 has online stores for residents of
Arizona,
Idaho,
Kansas,
Missouri,
Nevada, and
Utah
and 27 physical stores across Arizona and Nevada.
4. Measure Effectiveness Of Customer Service:
One of the essential characteristics of a great online
lending company is having a stellar customer service team
that can assist prospective borrowers before and after
taking an online loan. When you opt for online loans,
customer service is the only way to clear your doubts. They
should be quick in response, reachable 24-7, and have a
strong knowledge of the loan products. You can check the
reviews of past customers to get some idea of the level of
customer service of a particular online lender.
5. Watch Out For Lead Gatherers:
Lead gatherers are sites that pose as online lenders
themselves to gather data of potential borrowers to sell to
various lenders on different platforms. You should avoid
falling prey to such lead gatherers and only deal with
online lending companies to get funds safely. Falling into
such lead generators can waste your time, especially when
you urgently need cash.
6. Check Third-Party Verification And Reviews:
Some reliable and genuine online lenders provide third-party
verification on their websites. You can also check reviews
and ratings on other sources like
Better Business Bureau
to find online lenders that you can trust. However, judging
based on the reviews can be wrong since people tend to post
a review when they're disappointed and move on when they've
been offered good service.
How to Apply for an Online Loan?
Selecting the right online lender is one of the crucial
steps in applying for an online loan. Now that you know how
to identify a reputable and authentic online loan company
let's look at the entire process of obtaining a loan from
the moment you sense a need for borrowing funds.
5 Important Steps Involved in Getting an Online Loan
Determine Your Actual Loan Requirement
The first step involves deciding how much funds you need to
borrow and why. If your need for money is urgent, you can
borrow online.
Research And Select The Right Online Lender
Comparing rates, monthly payment options, and offers of
various online lenders can help you pick the best fit for
your financial need and budget.
Check Your Creditworthiness And Loan Eligibility
Your credit score may not matter to some online lenders.
However, checking your score and finding out whether you
qualify for a loan from the selected lender is essential.
Apply Online And Pre-Qualify
Make sure you read and understand the
loan agreement
thoroughly before applying and submitting the application.
Prequalifying for a loan can further help to carry out the
loan process smoothly.
Receive Loan Amount And Schedule Repayments
Once your online loan is approved, you may receive your loan
on the same day, depending on the lender. You can set up a
payment schedule and consider setting up automated payments.
Different Types of Online Loans
There are a number of different loan options available
online, so it's important to decide which is best for your
situation before applying. These three personal funding
options offered by CASH 1 are among the most common.
Choose from various loans to help you get cash fast with
approval in minutes. Available in select states.
Have extra funds on standby with our hassle-free line of
credit. Available in select states.
Use your clear vehicle title as collateral to borrow up to
$50,000. Available in Arizona & Nevada.
In Conclusion
Online lending is a relatively new method compared to
traditional banking. Still, it can become the first choice
when it comes to borrowing money. Moreover, getting loans
during emergencies has become more accessible online,
whether for individuals or businesses.
Suppose you are cautious while choosing the right online
lending company. In that case, you will gain all the
potential benefits and avoid any potential risks of online
loans. On the other hand, a legitimate online lender will
always protect the interest of their borrowers instead of
only focusing on their profits. This is precisely the type
of online lending company you would like to work with,
especially when money is involved. By being vigilant and
following the tips to help you choose a safe online lending
company, you might never regret borrowing from an online
lender.
How To Select The Right Online Lending Company [INFOGRAPHIC]