You have seen the adverts, you need instant cash and these websites claim to advance the money to you within a few hours after request. But is it prudent for you to take up the offer?
When you need a loan to cater for personal expenses, start a business or pay for emergency situations, you may be willing to land on the first deal that comes your way. However, this should not be the case. Smart borrowers take time to analyze their needs and find the best lender. Among the easiest and most convenient loans to request for are online loans.
With establishment of online banking, there are many reputable online lenders for borrowers to choose from. The number of people who take out personal loans to consolidate their debts, make home improvements and cater for unexpected expenses is increasing every year. The main reason behind this is that the loans are not only easy to apply, but also incur a lower interest rate for borrowers who have a good credit check.
Another advantage of requesting for loans online is that you do not have to wait in the bank for hours filling out a bunch of documents. You only need to meet all the requirements, fill out an online application form and have the money in your bank account within 2-3 business days. Some lenders can also approve the loan form within a few hours. Some of the loans available online include:
Small business loans
Unsecured personal loans
Secured personal loans
Cash advance loans
Online installment loans
Cash advance loans
Important considering before applying for an online loan
Online loans are becoming popular due to the ease of application and a fast approval process. But this does not mean that you can take out an online loan for no apparent reason. Remember that the loan will only be beneficial to you when used in productive ways. Here are some of the things to consider before requesting for a loan online:
Understand why you need the loan
There are a number of reasons that can lead a person to apply for a loan online. You may want to purchase a valuable asset, start a business, do home renovations, etc. Whatever your reasons are, it is important to ask yourself:
How much can you borrow?
How long will it take for you to repay the loan?
How often will you make repayments for the loan?
Just like any other type of advance, online loans need to be repaid on time. Failure to do so will not only have an impact on your credit score, you may also risk incurring more amount on interest. Most loans available online are short-term financial tools, and some lenders will even require you to pay the loan amount on your next payday. However, the loan term varies depending on the principal amount borrowed. If you take up a larger principal amount, the loan term can last for up to 10 years. It is important to note that the longer the loan term, the more you will repay.
Consider how much money you need
This sounds obvious, but you can be quite surprised by the number of people who request more amount that they really need, or even less than they actually wanted. It is important that you write down all your needs before requesting for the loan. This will help you come up with the ideal figure to apply for.
Analyze the loan cost
After you have figured out the most convenient amount to borrow, you also need to find out the total amount you will incur in repaying the loan, which includes the principal amount, fees and total interest incurred. The marketplace is full of online lenders with varied fees and interest rates. Doing background research before requesting for the loan will help you find a lender with lower interest rates.
Find out about the loan repayment terms
The good thing about online loans is that you can make payments over a period of time. Before committing yourself to an online loan, it is important that you find out about the terms and conditions of the loan. These include the loan features and repayment plan. Top providers of the loans offer flexible terms and convenient repayment schedules depending on the amount you have applied for. You also need to confirm if the interest rate is fixed or floated. Fixed rates do not change, no matter the nature of the financial market. Floated rates, on the other hand, tend to fluctuate depending on the market conditions.
Establish how soon you need the loan
If you need a loan to cater for emergencies, be prepared to pay more interest. Instant loans or bad credit loans are usually more expensive compared to other loans that can be repaid over a period of time. It is also important to know the lender you are working with. Some online loan providers will want to overcharge you when they find out that you are in desperate need of cash.
Benefits of Borrowing Online
With loans online, you can instantly know whether or not you qualify for the loan, how much you are eligible to borrow and the loan repayment plan. This is contrary to traditional borrowing where you will have to go through all the paperwork and at times, the loan may not be approved on time.
Online lenders offer different rates, which is why it is important that you shop around for the most convenient lender. Generally, online lenders do not follow the same approach as conventional institutions when offering the loan. They also don’t have the regulatory costs which eventually leads to lower rates.
Most loans available online are unsecured, meaning that you do not have to give any of your property as collateral. You only need to prove that you can repay the loan on time by having a consistent income source.
Before signing any personal loan agreement, make sure that you add up all the costs involved in the loan to determine the total amount you will be required to pay. Also ensure that you are well-versed in the loan application process. Applying for large funds with low interest rates is the best option. Considering all the benefits that come with requesting for loans online, it is definitely a loan worth considering.