Online loans are just that: loans obtained through an online lender. You can access an online loan through an online-only lender or a branch-based lender. Different lenders bear different procedures; however, most online loans involve a fairly simple application and approval process.
Finding a Lender
To get started, you must first take the time to find a reputable lender who operates online. Once this is accomplished, you can then begin the application process through the lender’s website. With branch-based lenders, much of the application is completed online, but borrowers will most likely be required to sign final documents at an actual branch. On the contrary, with online-only lenders, everything is done online.
For the application, borrowers are usually asked to provide financial information such as occupation, income, expenses, etc., as well as personal information such as driver’s license number, address, and Social Security number. To assess creditworthiness, lenders will run a hard credit check, and then approve or deny your application based on their determined results.
If approved, the borrowed funds will be directly deposited into a bank account. When the time comes to make a payment on the loan, lenders may automatically withdraw the owed money from that same bank account, so be prepared with the correct payment amount.
While most traditional lenders look for a good credit score, some online lenders approve loans even for those with bad credit. However, be skeptical of lenders who do not require any sort of credit check such as certain title and payday loan lenders, as they charge outrageous interest rates and fees, and make a profit off any missed payments.
When shopping for an online loan, borrowers can narrow down their list of potential lenders by applying for prequalification. Many online lenders allow you to apply for prequalification with a soft credit check, which won’t affect your FICO score.
Types of Online Loans
Peer-to-peer, personal installment, title, and payday loans are the four main types of online loans available. Title loans and payday loans are similar in that they carry high interest rates and short terms, making them more costly than others.
Online loans are nothing if not convenient. Most, if not all of the application process is done online, and the approval process is quick. Where traditional loans from a brick-and-mortar can take weeks to be approved or denied, online loans can take mere minutes. Because operation costs are cheaper for online lenders, they also generally have lower interest rates than traditional financial institutions.
With easy approval, fast funding, better rates, and smaller fees, online loans are a great borrower-friendly option in a digital world. If you’re on the search for an online loan that suits your financial situation, remember to compare online lenders and offers for the best rates and terms. For more information and guidance when it comes to online loans, visit LiftCredit.com today.