The need for emergency car repairs or legal fees can come unexpectedly when your savings are not prepared to handle the expense. A loan can be a convenient solution to secure funds for unexpected emergency expenses now, and pay for them later. Because some people have a hard time proving their assets and credit are enough for a traditional bank loan, people are turning to online lenders to help them get their start.
Before starting your search for online lenders for your loans, there are some things you need to know about using an online lender for a loan.
This article will explore the important differences between brick and mortar institution loans and online loans, and the pros and cons of each.
Loans Have More Availability Online
The reason brick and mortar lenders hold such a high bar for getting a loan comes down to availability. Since the bank itself is limited by the customers it has and the percentage of total money it’s allowed to tap into for lending, getting a loan has to meet a higher bar because they are playing customer’s money.
If you are looking for more flexibility or a bigger selection of lenders, you can look for an online lending specialist. Since the internet has a wider reach than your local bank branch, online lenders often have different requirements. There are online institutions that focus entirely on lending options, and that makes their loan availability much higher. Since they aren’t using their local branches funds to tap into their loans, they may be more likely to work with you without a huge credit history.
Loan Applications Are More Convenient Online
Taking the time to apply and go through the loan process with a brick and mortar institution can take weeks. This might be because of the large amounts of money you are asking for, or what you need to prove when you go through a brick and mortar bank for a loan.
When you pick an online lender, you can apply from the comfort of your home. Simply hop online and fill out the necessary application information from your computer or phone. After your application is submitted, it will be reviewed by the institution. If you are approved, funds can be delivered in as little as one business day. That kind of speed is unprecedented with traditional brick and mortar lending.
Watch Out for the Interest Rate
Before trying online lending, it is important to know that loans secured online can sometimes incur higher fees. The interest rates vary from lender to lender, just like the brick and mortar banks. Depending on your credit score and other factors going in, you will may see higher rates, depending on the amount you are looking to borrow and your situation.
You Can Grow With Either Institution
At the end of the day, you can grow with either lender. It really comes down to what you are going in with, and what you are trying to get out of it. If you have the time, assets, and credit, you are looking to borrow over $100,000, you will most likely want to go to a brick and mortar lender based on the difference in interest rates. They will most likely be able to work with you to provide better options for the large sums of money you require and figure out a plan to grow with you.
If you have bad credit, an online loan for an unsecured loan could be the best option to get funds for those unexpected expenses in life. Since the interest rates are usually a bit higher with online institutions, they are often more willing to work with people who have no credit or poor credit. This could also mean lower amounts of credit at higher rates, but you can grow quickly with an online lender if you make your payments on time.
There is no right or wrong choice when it comes to picking a lender. It really comes down to the level of convenience you need for what you are doing. A bigger business might use a brick and mortar bank to pay for their new building, or someone trying to cover an unexpected emergency expense could use online lenders to get them through it. It really comes down to what your needs are, and time needs to be spent. Do you need that money now, or can go in for the long haul?
Finances: 7 Reasons Why You Need To Manage Your Money