Dec 17, 2012

The many flavor of online loans

Getting a loan online is now easier than ever: there are many lenders offering instant approval, so that you can get the money in your account on the same day. However, there are also many risks associated with taking loans online. The first of them is that your personal data may fall into the wrong hands, and therefore you should always verify all the companies, before registering with them or sending them any applications. 

Understanding the Different Types of Lenders

One of the main advantages of searching for a loan online is that you can use more than the traditional brick and mortar bank as a lender. If your credit union has a good online presence, you can also apply there for a loan – and, even if credit unions were a bit slow to adjust to the digital age, things are starting to change, and many of them now provide online services.

Also, you can find peer to peer lending sites, where the investors are people just like you, who try to diversify their investment portfolio and make some profit by lending money to others. The procedures and requirements vary drastically from one lender to another. Even if you were rejected by many banks before, you may be able to obtain a good deal online, if you use your negotiation skills and you present a strong case for yourself.

How to Compare Online Loans

Most of the loans that you can obtain online are unsecured bad credit loans, allowing you to borrow small amounts for a short period of time, usually with a relatively high interest rates and quite pricey transaction fees. As such, it's not wise to abuse these loans, even if they're very accessible and easy to take, but remember they can also bury you in debt in no time, if you're not careful. (Of course, this doesn't apply if you're just using an online platform to access services provided by your bank, such as revolving credit lines or pre-approved loans.)

The competition among lenders is also high, which means they will try to grab your attention with a lot of advertising and hype. Avoid the temptation of borrowing too much, just because you found a good deal – there will be other good deals in the future as well, so only take what you need for the moment. Also, do not let yourself pressured into renewing your loan, if you don't need to.

When you compare loans from multiple vendors, always check the total amount to be repaid, which will give you a better view than comparing just the interest rates. Of course, interest rates matter as well, but, because these loans are for such short term, the closing fees and other associated costs can be much higher than the actual rates.

Take advantage of the possibility to compare loans and lenders with a couple of clicks, and select the best offer for your needs, taking all factors into account. Most of these loans have very high penalties for even one day of delay, so always take the appropriate measures to repay them on the due date, without failure.

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