If you are in need for some money, a personal loan from an online lender can get cash into your bank account quickly and sometimes, on the very same day you apply for the loan. If you are thinking about taking out a loan online, you will have a wide range of options when it comes to online lenders and financial companies that offer loans online.
Neither is better than the other, however, there are some advantages and disadvantages of taking out these online loans. In this article, you will be able to read about the pros and cons of these loans. Let’s take a look:
The Pros of Online Loans
There are various advantages when it comes to these loans and some of them include:
- Easy Approval
When compared to other types of loans, online loans are generally approved faster. Online lenders follow simple criteria which makes it possible for a lot of people to qualify for the loan. There are some questions that you will need to answer including whether you have a stable income if you have a bank account, and if you are of the required age to be eligible for the loan. You will probably be surprised to qualify for a loan even if your credit history is not so good. This is quite different when applying for a loan from a financial institution or a bank which will only give you a loan if your credit history is good.
- Less Hassle
There is little or no paperwork involved when you apply for an online loan and if you have ever applied for a loan from a bank, you probably know how much application forms you had to fill and sign. However, with online loans, this is not the case. The lender you choose will ask you to fill in a simple application form online and that is it.
- It Saves Time
As previously mentioned, you will not have to fill in application forms or travel to the bank to get the loan. Online lenders give you the chance to fill in the forms from the comfort of your house and you will get the money instantly transferred to your bank accounts. Hence, this will save you a lot of time and energy, as well as nerves. Also, you can use that time you would use to travel to the bank to do something else.
- No Guarantees
According to the experts from moneezy, most online lenders will not ask you for guarantees to get the loan. Sometimes, you might find it difficult to find someone you can use as your guarantee since they might be afraid of the consequences if you fail to repay the loan. However, online loans have made things easier since you can apply for the loan without a guarantee.
The Cons of Online Loans
There are some disadvantages when it comes to these loans and some of them include:
- High-Interest Rates
Some online lenders have higher interest rates compared to other loans. Hence, financial experts recommend that you apply for a loan if you are in real need or in an emergency situation. If you fail to repay the loan, they can attach extra charges.
- A Shorter Repayment Time
Banks give you a lot of time to repay the loan, however, this is not the case with online loans since you will be required to pay off the loan within two weeks or a month.
When compared to other options, going online to look for a loan is easier. When you are applying for a personal loan, make sure that you consider the lender’s fee, interest rate, loan amounts, monthly payments, and borrower requirements.