Online banking has been around for many years now but there is still not enough awareness about online lending or online loans. Luckily, there are now many different online lenders to choose from. You are not just filling out the same old forms for your bank that need to be reviewed by a bank officer. In fact, online lending has changed the way we borrow money.
Advantages of online loans
One might wonder how online lending differs from traditional banking or lending that you have been involved with. New generation lending makes it easy for lenders to borrow with many other benefits:
Online lenders tell you almost instantly whether or not your loans is approved, how much you can borrow and what is the payment structure. While traditional banks are different, you can fill out an application online. However, it might take a while to get the answer. This is because you need to review the application and might need to visit a branch in-person.
Better interest rates
Never finalize a loan before you do your survey. It pays to shop around and you will find that they often charge less than traditional sources. Since online-only lenders don’t have the same overheads as banks and traditional lending organizations, they don’t face the same coss. This means you can save more on interests.
Banks and credit unions have grown apprehensive in recent years. It is far easier to get a loan if you have a great credit score. But if you are a student or still building your credit, your credit score might not be good enough for you to get a loan via traditional means. Online lenders are likely to be more lenient towards lower credit ratings and use alternative means of information to evaluate your creditworthiness. Such as utility payments or data from your social network. In fact, online lending institutions have many more data points to evaluate the credit worthiness of an individual.
Most online loans are basically unsecured. That is, you don’t need to pledge any collateral to get it approved. This makes them safer in a way. If you fail to repay unsecured loans, then your credit score will suffer but you won’t lose property or face foreclosure.
How to Borrow
Getting an online loan is just like getting a loan elsewhere but just easier. All you need to do is complete an online form and provide your details, get approval within 24 hours of submitting the application if everything checks out and secure your funds. Most online loans send the money within a few hours of the approval.
Why you must avoid Payday Loans?
Many citizens in the Philippines are tempted to go for payday loans when they require funds. These are basically high-cost, short-term loans that are notorious for sending borrowers into an expensive debt spiral. Here are a few ways you can identify payday loans.
- They have very short terms. Typically a month or so.
- Payday loans are also significantly more expensive than marketplace lenders. If you are paying very high interest, then you are likely to fall into a debt spiral.
- If there is no credit check, then it is very likely a payday loan.
- Avoid lenders that ask for payment up-front. Advance payment is basically a scam that is notorious for taking your money and handing you nothing in return.
When borrowing money, don’t just rush to the most attractive or tempting offer. Shop around, weigh your options and stick with reputable lenders to avoid trouble. Online lending is easy, convenient and affordable. You just need to find the right lender.
Article you may find interesting: “What is an Unsecured Loan?”