5 Important Things to Know About Online Loans
March 19, 2021 by Daniel Azzoli
When you’re facing down a financial emergency, you’re going to want to act fast to mitigate some of the damage. But this might be easier said than done when you’re trying to make sure you make the right decisions for your finances. Especially when your stress and anxiety is pushing you into action without being equipped with enough information to make an informed decision.
Just remember that there’s no need to panic. The information you need to make the best choice for your situation is right at your fingertips; all you need to do is look for it. And we’re here to help! In this article, we’re going to list out some of the most important things you should know about online loans today, how they may be able to help you in an emergency, and some important things to look out for.
What are Online Loans?
To put it into general terms, online loans are simply loans that you would apply for over the internet. In fact, most of the entire online lending process happens online, with some parts happening over the phone depending on the lender. Many people consider online loan lenders as an alternative to more traditional, brick-and-mortar lenders, but financial institutions (like banks, credit unions, etc.) still may offer online loans.
However, there still may be some general differences between your experience when you apply for loans offered through online lenders versus those offered through storefronts. Online loan lenders may:
- Provide all the information about their products/services on their website.
- Have a simpler, more accessible, and streamlined application process.
This could lead to certain potential benefits, like:
- Having all the necessary information so you can do thorough research before applying.
- Being able to start the application process at a time that works best for you versus having to work around a storefront location’s business hours.
- Getting funds more immediately (depending on the lender).
This is just a brief description of some of the factors that make online loans unique, which we’ll take a closer look at below.
Online Loans Today: 5 Things You Need to Know
Like we said, when you’re thinking of applying for an online loan, it’s important that you’re well-informed before making any decisions. If you don’t already have a wealth of knowledge on the subject, you’ll need to do some research to bone up.
One of the most important parts of that process is to simply understand some of the basic benefits of online loans as well as some things to look out for. If you’re starting from scratch, here’s a list of important features to get you started!
1. They are Convenient
One of the main upsides of online loans today is that the process of getting started is relatively convenient. Like we mentioned earlier, the majority of this process takes place online, so you can start your application from the comfort of your own home, or any place you have internet access. If the online loans lender you’re applying for a loan with has a mobile app, then all the better! Either way, their website should be optimized for mobile so you can apply from your lunch break at work, a park, or virtually anywhere. The main point is that you won’t be forced to manage your schedule around making sure you can get to a physical storefront.
Another important feature that makes applying for online loans convenient is that in many cases, these financial institutions will give you the opportunity to apply 24 hours a day, 7 days a week. This means that if your schedule or location makes it hard for you to go to a storefront, online loans may be a more convenient option.
2. No Face-to-Face Interaction
For some people, a fully online experience is ideal. Maybe they work from home, or maybe they just like the convenience of being able to do everything from their computer screen. But that may not be the ideal system for everyone. If you prefer to speak to someone in person, the online lending world may not be what works best for you.
With many online loans, applying, managing your account, and repaying your loan all happen through an online portal. While online loan lenders will often have customer service agents that you can contact by phone, this mode of communication may not work for everyone. If you prefer to look someone eye-to-eye, online loans might not be your best bet.
3. They are Easy to Research
When you’re facing an emergency expense and need some extra funds quickly, you might be tempted to apply for the first loan you stumble upon without a second thought. But your need for fast cash isn’t a good reason to speed through the research process. No matter how dire your need is, you should always make sure to thoroughly review and compare your potential options to try to find the best product for your situation.
Luckily, this process may be easier in the world of online lending. Many financial institutions that offer online loans will generally list important loan details on their site, so you can easily pull up the important product details of loans offered by different lenders and compare them. You may also be able to visit third-party websites that conveniently compare important details of different borrowing options on the same page to make this process even easier for you. Just make sure that the third-party site is a trustworthy source for this information. Visit their “About” page, read any fine print surrounding their reviews, and do some research to make sure they have a good reputation. If you find that the site is paid to endorse certain products, keep in mind that these reviews may be biased.
4. You May Run into Technical Difficulties
If you’re applying for an online loan with a reputable financial institution, your experience navigating the online lending process should be relatively smooth. After all, they’ll likely have an IT team working to make sure nothing breaks down along the way, and customer service agents ready to help you if you’re having any issues.
Having said that, there are times when things happen that are out of anyone’s control. You might be in the middle of your application when your internet shuts down. Or maybe the financial institution’s website runs into some technical difficulties on the backend. While these things may not be regular occurrences, they’re something to keep in mind.
You’ll also want to consider your own comfort level with navigating a process that’s almost entirely online. You may not need to be a tech expert, but you’ll need to have some familiarity with doing research online and navigating the web. If these are things that are completely new to you, you may find it a little difficult to navigate the application process and/or manage your loan.
5. Simple Application Process
On top of online loans being fairly convenient to apply for, generally speaking, these financial institutions also try to make the actual application as simple and easy to navigate as possible. When you’re in need of money quickly, you may not be in any mood to work your way through a lengthy and complicated application. As such, because these applications are filled out online, financial institutions try to make their websites as well-designed as possible.
What does a well-designed experience really add up to? Well, the idea is to make them easy to understand, straightforward, fast, and transparent. They should give you all the information you need to know about their product on their website, without things being overly complicated. If you still have questions, they should have customer service agents ready to help you as well as an FAQ section to answer commonly asked questions.
Be Thorough When Deciding Whether or Not to Apply for Online Loans
At this point, you might be asking yourself, “am I ready to apply for online loans today?” The answer to this question is going to have a lot to do with your particular situation and how much work and research you’ve already put in.
Use the list we’ve made here and some additional research to make your own list of pros and cons and apply them to your situation. Compare different online loans and list out their rates and terms. Ask yourself if you think your situation calls for some extra funding. Can you get this money from anywhere else? Can you afford to pay off the loans you’ve found online? What type of online loan is best suited to your situation?
Once you’re able to answer these questions, you’ve taken stock of your financial standing, and you have a list of potential borrowing options, you should be ready to make an informed decision.