Lending has been revolutionized with technological advancement. It has done to the advantage of both the lender and the customers. While the lenders now make more informed decisions due to advanced background-check tools, the loan application process has been simplified for borrowers. It is a win-win situation.
The loan application process has been simplified particularly because of the online application. A paper application is not only exhausting but also inconvenient. While there is an application part that requires filling of paper forms, it is limited. Loan paper application will require you to get the forms, fill them out, get them signed, and then take them back for examination and approval. There is a lot of traveling involved with a paper application, especially if you live far from your lender.
Nowadays, the loan application is easy and straightforward. Specifically, applying for a loan online can be very easy. Be it a mobile money loan or online installment loans with monthly payments, you can visit your lender’s website any time and apply for the loan. Getting a loan from a financial institution or a bank doesn’t have to take too long, especially with the simplicity of online loan application.
Apart from the convenience which comes with applying for a loan online, you will also get your loan approval much quicker. If you need cash urgently, online loans are the way to go. However, they also have their downsides. The following is a breakdown of the advantages and disadvantages of online loans.
Upsides of an online loan
There are many advantages associated with getting this type of loan. Here are some:
Easy approval
Compared to other types of loans, it is generally faster to get an approval with this type of loan. Generally, the criteria you need to meet to qualify for an online loan is usually low. The criteria can include, but not limited to, having a stable source of income, being of legal age, as well as having a bank account.
It gets better because even people with bad credit can get online lenders who can issue them loans. Some online lenders tailor online loans to meet the needs of people with bad credit. If you apply for a loan at the bank with bad credit, your application will most likely not be approved.
Convenient
Unless you’re looking to apply for 203K loans, this type of loan allows you to apply for the loan you need conveniently. There is no paperwork hassle in online loans. When it comes to applying for loans from banks, you will need to do a lot of paperwork and, additionally, you would need to be thorough while at it or else you might not get approved. When it comes to online loans, you will just fill a routine online form and you’re set. You can do it at the comfort of your home.
Downsides of an online loan
High fees and interest rates
The fees and interest rates charged on online loans can be more as compared to what financial institutions and banks charges. Furthermore, if you fail to repay your loan on time, the fees you will incur will be great.
Short repayment period
Loans from financial institutions can be flexible enough to give you a repayment arrangement that spans through a period of time. You can have your normal loan repaid in a span of years. On the other hand, online lenders will require you to service your loan in weeks or months.
Vague terms and conditions
Some online lenders may site terms and conditions that can land you with problems. Some terms and conditions can expose you to high risks and some rogue lenders can intentionally hide or make them unclear.
It is important to weigh your options before deciding on a loan to take. Fact out the considerations to take and decide on whether to get an online loan application or not. The online loan application is, however, most suited for people with urgent cash needs which can be catered for by small loans. This is probably one of the reasons why online loan application has become common in the United States. Apart from convenience and easy approval, it also fosters privacy. You can apply for an online loan within the confines of your home without being seen going to the bank. Additionally, online application is open 24/7.