What are the pros and cons of online loans?
Financial emergencies happen to the best of us. And when they do, plenty of people have to borrow money.
Taking out a personal or business loan can help you bridge the gap on subpar savings, so you can deal with an unexpected emergency expense right away.
Nowadays, you have a major decision to make on how you get a loan. Will you head to your nearest financial institution and ask for help in person? Or do you plan on applying online?
If you aren’t sure why you would opt for loans online, this guide is here to help. You can weigh the pros and cons to determine if it’s the right method for your needs.
Pro #1: Huge variety
One of the biggest advantages is the selection. When you head online for assistance, you aren’t limited by the four walls of a financial institution. You can compare rates and terms from hundreds of online direct lenders in a single afternoon.
This is almost impossible to do with in-person loans. Your hometown may not have that many lenders to visit. Even if you did, you probably don’t have time to travel between each location.
Pro #2: Fast applications
Once you find the one, applying is easy and fast. Many online direct lenders remove the complicated paperwork that delays in-person loans. All that’s left is a simple application that takes a few minutes to complete on their website.
A fast and secure application means you’ll be able to get through the application process quickly. And, if approved, you’ll get you’re the cash you need that much quicker as a result. In some cases, you may even receive your funds on the same business day as your approval.
Pro #3: Convenient experience
The convenience of online borrowing cannot be overstated. You won’t have to go anywhere to look up rates or terms. You can search for online loans on your phone or laptop as soon as you realize you need help.
Many online direct lenders have all this information front and center on their website, and their applications are available 24/7.
Con #1: Can be expensive
One person’s pro can turn into another person’s con. Only people with excellent credit will access the greatest selection of loans online. People with bad credit may only qualify for payday loans or installment loans for bad credit.
Some of these financial products come with triple-digit APRs, making them an expensive borrowing option.
Con #2: May have short terms
If you’re borrowing on bad credit, there’s a good chance you may have to deal with short terms on top of high rates. Payday cash advances are usually due back all at once by your next payday. This short timeline can be challenging to follow if you don’t have a lot of expendable cash in your budget.
Con #3: Not accessible to everyone
Online loans rely on tech to function. You may not find this digital option convenient if you don’t have a computer or reliable access to the Internet.
And although you may use a public computer at a library or Internet café, these devices aren’t secure. Hackers could eavesdrop on your activity, peeping personal information and financial account numbers when you apply or repay your loan online.
How do the pros and cons weigh up?
Compare pros and cons — this exercise can help you determine if it’s worth opening your laptop or the front doors of a financial institution.