Tips on How to Apply for an Online Loan
Sometimes life can take you in circles. Your wedding is coming up in two days, the caterer has just canceled the agreement, and you have to dig deep into your pockets to pay for the new caterer since it is a last-minute rush. As such, you require funds to cover these costs, and quickly! An online installment loan is a form of a personal loan borrowed for a term of up to two years and payments made at least twice per month. The money is typically paid back in small fixed amounts monthly, so at the end of the two years, the loan is fully paid. The installment payment typically encompasses the principal and the interest charged for the amount borrowed. The interest charged on installment loans varies contingent to the state legislation, the lender, current income of the borrower and his or her credit history.
Why Personal Online Loans?
Thanks to technology, the number of persons opting for personal loans has been increasing steadily. According to recent research, the number rose by 18% between 2013-2015. That shows how people’s appetite for personal loans has increased with the majority opting to get the loan online. But the question remains: why are so many borrowers opting for nontraditional ways of getting loans over banks?
Individuals are opting for nontraditional ways of acquiring loans because of a myriad of benefits that come with these personal online loans. One of the most significant advantages of personal online loans is that an individual can look for various lenders and compare them at his/her convenience all in real time. Most of these websites have filters that allow you to compare the loan charges for different loan amounts and pick the one you feel most comfortable with.
Speed is also another benefit that attracts borrowers to use online creditors over banks. While traditional lenders employ a lot of bureaucracy in lending, personal online loan lenders can take just one day to process your loan. They use a different and straightforward method. They start by assessing your loan application quicker than the competition, an undertaking that could take traditional lenders up to some weeks to evaluate. An online creditor will give you an answer about the status of your loan request in less than an hour in most cases.
You might be asking how online lenders manage to evaluate and approve applications so fast. Well, they have a specially designed software which they use to assess the potential risks of the applicant easily and quickly. When you combine the usage of highly effective software and quick decision making, you get a rapid process. That is why you can get an answer quickly when you apply for a loan online.
Another advantage comes in the delivery of the borrower’s money after the approval of the loan. Online lenders can do that quickly. They make the funds available in the borrower’s account much faster than their traditional counterparts, sometimes in less than a day.
One aspect that makes the online personal loan lenders stay on top of the game is that they don’t need a lot of money to operate. They have low running costs, and that implies these lending firms require less money to continue operating and making a profit. The money saved by the companies in terms of low operating costs means they can give you loans at low rates and tailored to your needs.
Before You Get a Loan Online
Before you get a loan online, you need to comprehend your suitable lending situation; whether you need flexible interest rates or fixed. How much are you willing and can pay in regular installments? Do you want an online installment loan or a payday loan? Besides, you need to deliberate how much you are able to pay in levies and other borrowing services. If you have the answers to these questions, you would be able to find an ideal lender.
Ask for References
The power of word of mouth cannot be underestimated, especially when it comes to collecting information concerning a lender. The information you receive is powerful, since it gives you a perspective about a particular lender from an unbiased party. You can get referrals from colleagues, friends, and family members. You may also want to consult a financial advisor for professional advice. Any information about the experience of the borrowers to knowledge about the uniqueness of the creditor in the financial industry can be valuable when it comes to analyzing and narrowing down your selection. Assuming that the people giving the endorsements for a particular lender are not earning any commission from the firm they recommend; you can get an excellent understanding of the choices from them.
Check the Credentials
After narrowing down the possibilities by asking for recommendations, you can proceed to the next step and look at the credential of the remaining online lenders. You can look at their credentials on their website to get a glimpse of what they offer and possibly know why other people are recommending them. You want to see whether they provide the specific services you are looking for and at what cost. Apart from their websites, you can also get their information from state banking departments, since they keep directories containing info on online creditors.
Experience Is Valuable
Well, you want to deal with a reliable firm when it comes to financial matters. Although it will be hard to find an online lender with a couple of years of experience like firms such as Chase and Wells Fargo, it is prudent to choose an online lender who has some reputation and is well established to avoid some dubious activities. Always opt for online lenders with a good track record since they have a reputation to safeguard and will make sure you are satisfied with their services.
Look at the Contact Details
Yes, technology has made things much easier and convenient, and you can operate an enterprise without an office. Nevertheless, though online lenders might not require to have branches like their traditional counterparts, it is crucial to have offices. Be careful when doing business with small lenders operate from their homes. Always look for the addresses of the lender online in their contact details. If you find it is located in an unclear or a residential neighborhood, don’t consider it, click on the next possible online lender.
Pay Attention to The Online Loan Agreement
While the business contacts, experience, and references from other customers are essential factors to consider, don’t underestimate the importance of paying attention to the online loan agreement. Spare enough time to go through the contract and understand it, so you know what services you will be getting and for what cost. When requesting a loan online, it is easier for borrowers to hit that ‘Next’ or ‘Ok’ button without understanding the details. Look for hidden charges such as membership and application fees, which in most cases are not included when calculating the total amount payable.
How to Get Safe Online Loans
The Internet has made things easier. Nowadays you can do multiple things online ― from paying bills to ordering food. However, the risks are significant when you want to get a direct online cash loan in order to boost your business: online commercial loan providers require you to share sensitive information so that they can process your loan.
In most cases, you are not familiar with these online lenders, and you are not sure how else they can use the info you give them. Sometimes, you may need a relatively significant amount of money. So how do you ensure you are getting safe online loans?
The best way to be safe when dealing with online creditors is to ensure you thoroughly examine the lender you are dealing with and most importantly, keep an eye open for warning signs. Customers are exposed to four main risks when applying for online personal loans:
- Losing money is a real danger ― unscrupulous lenders can quickly start an online lending firm, they promise customers great things and charge some fees for processing and approving the loan. Ultimately, they disappear, without delivering what they promised or what you paid for.
- Paying too much ― even if you do get the loan, the charges you recompense for the loan might end up being a lot more than necessary in terms of the interest rates and fees charged by the online lender ― you end up spending more money down the drain. A reputable online lender should be able to give you the same amount of money for less.
- Identity theft ― this happens when you send your personal info to identity thieves or when you give your data to online lenders who don’t have security software to protect its client’s data (even when they collect customer’s information in good faith and utilize it for good reasons). The info you provide during your loan application is precious for anyone who wants to steal your identity; your date of birth, current place of work, your income, Social Security Number, your current address, etc.
- You might also waste a lot of time trying to apply for a loan online from pretentious online business loan lenders, and as if that is not enough, you waste more time trying to recover your lost cash.
To get safe loans online, we have already discussed some of the means you can identify and hand-pick the right online lender. However, here we are going to emphasize the source of information regarding online lenders. Your friends, family members, and work colleagues can help you with reliable information. Remember that the more reliable the origin of the information, the more poised you will be when you apply for a loan online and it is less likely you are going to find yourself in a trap. So, you need to avoid less dependable sources of information such as:
- An email out of nowhere ― this cannot be a reliable source of info, and you shouldn’t waste your time reading it. Spammers send millions of such emails daily, and you might not understand who you are dealing with. The same applies to the mail that comes to your home.
- Unsolicited phone calls ― especially coming from blocked numbers, are commonly utilized by scammers. Even if it appears like a local caller, the caller could have a vast network across the country (with tools such as Google Voice and VOIP, anyone can use a number that appears local).
Beware of Red Flags
Sometimes phony online lenders are not as smart as they think and, in most cases, they give themselves away. When you go to their websites or when they call you, find out how they carry out their operations before you consider giving them your personal information or your money. If you notice these warning signs below, look for another online loan lender.
- Upfront fees: Well-established and reputable lenders don’t ask for upfront fees. This “advance-fee scam” is a common method utilized by online scammers, who persuade you to pay a certain amount of cash for application processing. Well, there are some authentic loans that require you to spend some money during the application, but these are normally substantial loans such as house loans (you might be asked to pay for the valuation, a credit check, etc.) and all the payments are well stipulated in the official disclosure agreement. However, when it comes to requesting an online installment loan, fees should be If you pay this fee, we assure you they will ask for a “one last” fee from you again and again before you realize their scam.
- Sure approval: This is a big red flag even the most imprudent person can unravel. Online lenders are in the business not to make you wealthy; they exist to make a profit, and they will approve everyone for a loan. Some online lenders place high stakes compared to others, but regardless, they will want to evaluate your financial situation and consider reasonable perils before making a decision. If you have no source of income, even no possessions that they can use for security, and shoddier, no positive or undesirable credit history about you, how are they going to be at least certain that you will repay their money, let alone the interest, but the principal sum? Online loans, direct lenders who approve their loans to “anybody” or online loans for poor credit history are typically more intelligent than you think ― often they have a smarter way to get high profits that compensate the high risks they take (which implies you might be paying a lot of money in interests and fees), or they want to steal valuable data or even money from you.
- Request for money via Western Union or a wire transfer: I mean, there is an issue pressing you and that is why you are approaching them to get some money, then why would they ask you to send them money? Besides, most online lends are reimbursed with a credit card and have legal charges. If the lender requires that you pay through an instant payment method such as a wire transfer, Money Gram, etc., it is clear that you are being scammed. Once you make those payments, your money will be gone forever, and you cannot trace the recipient of such payments. On the other hand, online lenders who ask for check payments, confirm that they have a good standing bank account to deposit your checks (which can easily be traced by law enforcement agents when necessary).
- Unprofessional services and sales: A “basic” website with a lot of misspelled words here and there could be a warning sign that you are negotiating with scammers. Security warnings from your browsers are also a sign that you are getting yourself into danger. Finally, listen closely to the tone of sales staff when speaking with you – are they trying to pressure you or persuade you, or are they abusive? That could be a clear sign of what you are likely to get if you agree to deal with them.
- The name game: online loan scammers recognize the impact of the first impression, especially to people searching for safe loans online. Since they have nothing tangible to offer customers, they pick official-looking names or sometimes very confusing company names. For instance, they choose names such as Federal, National, State, etc. to relate their business as close as possible to the government for deceptive purposes. Some even copy the name of a well-established and known bank and exchange one letter or two letters to confuse you. That is a common tactic used by scammers which many unsuspecting customers fall into.
Some loans are quite dangerous regardless of who lends you the money, and it is easy to get them online.
Some loans can leave you in a debt situation worse than the financial position you were in before you applied for it. Loans such as title loans and payday loans are notoriously known for charging borrowers high fees that are usually charged over a long term which ends up being several times more than the interest rates.
These are not supposed to operate in your country, but the world now is like a small village, and they can still give personal online loans and charge fees and interest rates to other people anywhere in the world. It is crucial to check with state financial departments to know whether the online lender you are considering to borrow from is authorized to offer such services in your country. Reputable online lenders will always have valid licenses and are fully registered with the federal government.
Some online lending institutions take advantage of desperate borrowers or those who do not have multiple options. Some common illicit methods include:
- Charging a higher interest rate than what is allowed by the state.
- Charging hidden fees to customers.
- Violating debt-collection laws, which dictate how lenders are supposed to collect defaulted loans.
When you google “online lending sites” you will get results about firms that say “we don’t lend money to borrowers” the website is crammed with lead generations platforms, which gives your information to online lenders. Lead generators carry out marketing very well; you need a loan, and they are there to look for someone who can lend you the amount of money you need. Many reliable websites do this and provide essential services (while being paid some few bucks per lead); however, shady executions can cause issues.
So, be wise when giving out your information to the sites that promise to get the best online lenders for you they might give out your information to several phony lenders or identity thieves who will tirelessly try to get money from you.
You can get safe loans online as long as you conduct the necessary due diligence, and you can repay such loans. Online lenders are willing to give you any amount of money possible according to their assessment, which is based on your credit history and income. But why should you borrow the maximum? It is not a good idea. Even if you are in an excellent financial position to repay the loan, you never know what may happen in the future. Always play your cards well.
Online lending has come a long way, and it is no longer something new to borrowers and lenders. Financial institutions, small and large, are benefiting from high efficiency and low costs of carrying out business online.
Personal online loans provide borrowers several benefits, such as a pool of lenders where they can choose the best, quicker approval of loans and direct online cash loan access. As long as you know how to avoid drawbacks associated with personal online loans, you can enjoy the benefits of online loans.