If you are in need of a cash infusion, online loans are available for just about any reason. If you need to make a down payment, start a business, or even pay for a vacation, you can use an online personal loan. Let’s find out more.
Online lender types
Online lenders’ websites might look the same, but there are many differences. For example, banks have online personal loan services, which are very much like going to a brick-and-mortar bank.
Some credit unions also make loans online, but you typically have to join the credit union to qualify. These organizations often offer advantageous rates to members who typically represent a specific industry or geographic area.
You also can try peer-to-peer lending services. These are online platforms that link private lenders to borrowers (think Lending Club). They can vary widely in terms, but many have very competitive rates. Some peer-to-peer lenders are not available in all states, and it might take time for your loan to recruit enough lenders.
Finally, there are online loan companies that are not banks, and not peer-to-peer — Best Egg, for example. Online lenders offer the advantage of speed. Some even approve and disburse loans within 1-2 days. The downside to these services is that interest rates are often higher.
Is it safe?
Some people hesitate to use Internet-based financial services. You can certainly go to a bank office to get a loan, but then your options are limited. The fact is that thousands of legitimate loan transactions are completed online every day in a safe and secure manner. Most major banks also provide a wide range of services online, including personal loan processing.
Online loans for bad credit?
Essentially every online lender will check your credit score. This score impacts your loan eligibility and your interest rate. Online loan companies that are not banks and not peer-to-peer are more likely to provide loans to people with lower credit ratings. Again, the price you pay is higher interest.
Loan finder services
Another option to get the lowest rate for online loans is to use a loan finder or loan marketplace service. These platforms do not actually make the loans, but they have access to multiple lenders that compete for your business. These systems can often uncover the best rates on the market.
Pitfalls to avoid
Unfortunately, the online lending sphere also contains some scam artists. This can range from those seeking to steal from you outright, or trying to trick you into loans with outrageously high interest rates.
Make sure you do your homework. Check for reviews online and with the Better Business Bureau.
Make sure the lender you use is licensed, and that you understand and agree to all loan terms, especially the interest rate and fees. Unlicensed Internet lenders may charge interest rates and fees that exceed what is allowed by state regulators.
If an online lender asks you for highly detailed personal information before giving you any details about loan limits, terms, or interest rates, then it might pay to look elsewhere.
If you are looking for a personal loan online, do your homework. You should have no problem finding a safe lender that fits your needs.
Credible is a multi-lender marketplace where lenders including Avant, LendingClub, PAVE, Prosper and Upstart compete for your business. You can compare personalized offers from multiple lenders on Credible.com without sharing your personal information with lenders or affecting your credit score. Vincent Chough is a writer who earned his medical degree from the University of Pittsburgh School of Medicine and practiced in the U.S. for 10 years. He now lives in Argentina, where he’s involved in NGO management at the executive level.