Everything nowadays is done online from ordering your groceries to college classes everything is taken to the World Wide Web. Gone are the days where you have to queue up in a bank for different services, the only two bank functions that are not possible online are withdrawing and depositing cash.
An online loan takes you through all the stages of a loan application from the comfort of your couch. The prequalification to receiving the money everything is done online. Borrowing money couldn’t be made simpler.
What is an Online Loan?
An online loan service can be offered by either a traditional financial institution or an online-only lender. There are various types of loans that are offered online but the most common type is an unsecured personal loan.
When it comes to traditional lenders like banks there are certain requirements and minimum credit scores that required in order to be eligible for an online loan. You can always check your prequalification througha soft credit score which won’t hurt your credit score.
After this you might have to agree on a hard credit score to fill out an application, this will generally hurt your credit scores a tad bit. To complete this step, you have to upload documents for verification, like proof of identification and proof of income.
After verification and approval, you can get the money directly transferred to your bank account.
Online Loan vs Traditional Loan: The Differences
Most banks offer online loans nowadays but there are still some points that can make online only lender more attractive. However, this depends on your preference and these same points could make them less attractive too.
No physical contact: Maintaining social distance and avoiding physical contact is especially important during a pandemic as such. So, the most obvious advantage (or disadvantage) is that there is nophysical contact with a banker or representative.
Any enquiries will have to be sorted over the phone or online. This point depends on how comfortable you are when it comes to dealing with people online.
Quick Applications and Reviews: Online lenders usually have simple and dedicated automated systems that streamline the application process. The lender can quickly verify everything using software rather than a person. This also greatly reduces errors. So, if you want to borrow money now the best option is to go for an online loan.
Targeted Loans: Most online lenders don’t have a variety of products. They have super customized loans that are tailored to a specific group of customers. Some loans are made for borrowers with poor credit scores while some products are targeted at borrowers that have a good credit score.
Potential Saving: Since online lenders don’t have a lot of overhead costs their interest rates are quite low however this not true for a traditional lender that is providing online loans.
This is only a quick guide on online loans. Deciding between an online loan and a traditional loan is completely up to you. Before going for an online loan, you should also consider the reputation and trustworthiness of the lender. Be aware of scammers.