When guest author Alice Johnson first sent her article about online loans to me, I wondered how the post related to blogging tips.
Bloggers need money to pay their blogging expenses. They may consider taking out online loans.
Should You Get an Online Loan? 3 Pros and Cons
When you start looking for loans, you can skip the bank process and get an online loan. But should you? Who’s the best fit? Learn here.
As of 2018, Americans collectively had $128 billion in personal loans – a record high.
Whichever way you look at this number, one thing is clear: more and more Americans are relying on personal loans to get by.
That said, loans aren’t necessarily a bad thing. They help us build credit and can be life-saving in times of health care emergencies.
What’s more, the emergence of online lending companies has made applying for credit more convenient. But should you take out an online loan?
In this article, we dive into the pros and cons of these loans. Keep reading!
Reasons to Apply for Online Loans
Why would you want to apply for an online? Here are some of the top reasons.
The internet has revolutionized how we do a lot of things, from how we consume and share information to how we shop for groceries. Now it’s changing how we apply for credit.
A couple of years ago, to get a personal loan you had to physically visit your bank. If you wanted to know whether the loan had been approved, you had to keep checking your account balance or make calls to the bank.
Today, you can apply for a loan from the comfort of your own home or office. All you need is a computer or smartphone with an internet connection.
No Paperwork Hassle
Back in the day, you had to make do with piles of paperwork if you wanted a loan. In some cases, you had to fill out multiple copies of the same form. Woe unto you if you made an entry error because it could mean filling out a new form again!
Thanks to the internet, paperwork is a thing of the past.
Just log into your preferred lender’s website, navigate to the loan application portal, and type in your details. If the lender needs your identification documents, take a photo of the ID or make a scan and upload.
Get Cash Fast
Sometimes you just need money fast.
Maybe your loved one has fallen ill in the dead of the night and you urgently need money to take them to the hospital. Or your car breaks down in the middle of the highway just when all you have is 10 bucks!
Online lending makes fast access to cash possible.
Most review and approval processes are now automated, meaning what stands between you and the money is a few click or taps – as long as you meet the lender’s approval requirements.
Online Loans for Bad Credit
Since the Financial Crisis of 2008, banks have developed a reputation for playing hardball with borrowers. They raised the credit qualification bar, effectively locking out millions of Americans from the credit market.
So if you’re one of the 30 percent of Americans with bad or poor credit, it’s likely a bank has turned down your credit application.
Does this mean there’s no hope for people with bad credit?
The good news is there are several online lenders offering personal loans for bad credit. Check out this page to get more information on how these loans work and what you can do to qualify.
Get Better Rates
If you’re lucky enough to get a personal bank loan with a bad credit score, then you’ll certainly pay higher interest rates.
However, with an online loan, you can get better rates.
From a business standpoint, it’s easy to see why online lenders charge lower interest rates. Doing business on the web eliminates a significant chunk of labor and space costs, meaning these lenders have lower overheads. As a result, they don’t have to charge high rates to make more money to finance their operations.
That being said, not every online lender offers attractive interest rates. A lot will depend on your specific financial situation, and you must shop around for lenders with the best rates.
Reasons Not to Take Out Online Loans
Looks like online loans are all perfect, right? Well, here are a couple of reasons you might want to look elsewhere.
Although the internet has made applying for loans easier, it’s also made the process riskier.
As technology advances, cyber hackers also get sharper. They can penetrate an online lender’s digital systems and steal customer data.
Obviously, nobody wants their personal and financial information leaked online. But this is a risk you have to take when applying for an online loan.
To minimize this risk, borrow from established online lenders with a strong reputation. Such lenders typically have strong cybersecurity measures in place.
Lack of Face to Face Customer Service
When applying for credit, you must read and understand the loan’s terms and conditions. But it’s not uncommon to run into financial and legal jargon that needs clarification.
Unfortunately, online lenders don’t offer face to face customer service. To get clarification, you have to call in or use a live chat feature if available. This is not as efficient and interactive as talking to a person physically.
Online Loan Scams
In 2018, Americans lost at least $1.48 billion to fraud.
If you aren’t careful, you can fall victim to an online loan scam.
Once you start searching the web for online loans, you open a can of worms.
You’ll certainly start receiving emails with loan offers. Unable to tell a legitimate lender from a shady one, you might end up giving your details to scammers. Some prey on your desperation, especially if you need money quickly or your application has been denied multiple times.
Before giving your information to any online lender, research them. Read online reviews and know what people are saying about them.
Also, avoid borrowing from smaller lenders who might be promising lower rates. Better borrow from an established lender charging a slightly higher rate than risk borrowing from an unknown lender who might be a scammer.
Getting an Online Loan: Proceed with Caution
Online loans are an attractive prospect. The ease, convenience, speed, and lower rates make them ideal for any borrower.
But they aren’t without a downside. From security issues to fraud risk, applying for an online loan can turn out to be a nightmare.
The verdict? Online loans are awesome, but be sure to proceed with caution. Do extensive research and borrow from reputable online lenders.
All the best in your quest to achieve financial security.
Many commenters felt a way to get money fast is to take out these online loans.
For more ways to get paid, read this Kingged money apps article.
Host blogger’s comments:
Readers, please share so people considering borrowing money know the pros and cons of getting an online loan.
What are your opinion of online loans? I look forward to your views in the comments section.