Before you send a loan application, you are supposed to assess your situation objectively. A loan is a financial obligation you have to obey. Knowing this should motivate you to make wise decisions, right from application to the use of funds. For instance, you need to apply only for the loan amount that you need, not the maximum you qualify for. You should be able to repay the loan within the required timeframe. Failure to do this will lead to negative consequences. Some years back, banks and credit unions were the key players in the industry.
Even though the art of online banking has been there for many years, it took too much time for online lending to gain momentum. Nevertheless, today, there are so many online lenders, thanks to technological advancements in this sector. There has been a recent surge in popularity of online lending. People who reluctant to try it in the past are now embracing it.
You remember how tedious it used to be applying for a loan from traditional lenders? One would be required to prove his or her eligibility through voluminous documentation. Since there were high demands for funds with the limited lending option, people would queue for as long as the whole day in banks before they could be attended to.
Today, the competition in the lending sector has streamlined loan application processes. But let us focus our attention to one crucial thing — online loan application. Is it safe? Where can you borrow? What about the interest rates? We are going to discuss the things you must know about the online loan application. Let us begin with the issue of safety.
Is an Online Loan Application Safe?
The answer to this question is no. This is the first thing you need to know before you even think of applying. There are so many risks associated with loan applications as well as the entire online lending process. Let us highlight some of the risks you are likely to suffer in this regard.
Generally, applying for a loan online requires you to give sensitive information about yourself to the people you hardly know. Identity scam involves providing scammers with information unknowingly. For instance, the application forms often require information such as your physical addresses, your social security number, and your debt of birth. This sensitive information that scammers have commonly used to access the accounts of borrowers. Still, you may give your information to legit lenders, but they may fail to safeguard your information.
So sad to say that in the process of borrowing funds, you may end up losing your hard-earned money. Unethical business people often set up kiosks and profess to be offering loans. However, they will ask you for some fees before your loan is processed. If you do not notice this, you will lose the little money that you have instead of getting what you wanted.
Paying too much
While you may not be scammed, you may end up paying too much. The application may be successful, and you may receive the funds you wanted. Nevertheless, you are likely to spend too much in terms of fees in case you are dealing with a bad lender.
Waste of time
During the loan application process, you may take too much time getting all the required information and proving yourself eligible before lenders. It can be a significant loss in terms of time if you are dealing with bogus ender. It feels terrible to waste time on something that is not worth it.
The best way to avoid all these risks is to ensure you are dealing with legitimate and reputable lenders. Ask for referrals from friends and family members. You can also get information from online review platforms. Make sure you are getting information from trustworthy sources.
What about Interest Rates?
This is yet another area you have to be very careful. Generally, different lenders charge different rates. However, online loans are relatively more expensive compared to traditional bank loans. This can be attributed to several factors, including the high risks involved. However, you can get lenders offering loans at lower rates with better terms than others. So, the secret is to do shop around. You can also compare loans online before sending an application. There are chances of getting a loan at a lower rate than you could be charged elsewhere. Remember if the interest rates are high, the loans are expensive. Since the repayment period is often short, you may struggle to pay off the loan.
How to Apply
The process of getting an online loan is similar to obtain a loan from other sources, though it might be easier. You will be required to give your personal details. This information may include the SSN and your addresses. You may also be required to provide information about your finances, including job, level of income, and expenses, among others. To start the application process, you only have to select the lender online, fill the application form, and submit. The process often lasts for 15 minutes. The application can be approved within minutes, though funds may be accessed in the next business day unless you apply early in the day and get approved immediately. The earliest lenders in the field include:
● Peer-to-peer (still considered the best options).
● Lending club
If you need a guide to check out different loan rates you may check Loan Advisor Best Licensed Money Lender Reviews. It is up to you to do research for the best ones that suit your needs. However, we want to caution you against payday loans. When looking for online loans, these are the most likely options you will come across first.
The following are some of their characteristics:
● They are short term. They are supposed to be paid by the next payday
● The interest rates and fees are very high.
● May require upfront payments
● Lack of credit check
These loans are sometimes referred to as predatory lending because they are costly and often ruin the financial status of borrowers. Avoid them completely.
There are so many legitimate online lenders out there. However, there are so many scammers also, and so you need to be very careful in your application. It is essential to do proper research about a lender before sending a request. What are the benefits of online loans? Do not miss our next discussion.