There is no shortage of options when it comes to sourcing a payday or installment loan lender. A quick Google search produces thousands of pages of companies offering short-terms loans in seconds as well as various websites that offer financial advice and/or calculators for various loans.
In many cases, the difference from one lender to another seems to be their name and the state in which they operate.
However, there is much more to choosing an online lender than meets the eye. Indeed, if you are considering applying for a loan, it's important to understand who you are borrowing that money from.
If you find your lender online – you should do your research to find out if you are clicking on a direct lender or a third-party aggregator.
An online direct lender will provide a loan directly to you without any intermediaries or middle men. The information that you provide on your loan application – your name, email address, social security number and more – goes directly to the lender who decides if it will grant you the loan or not. If the lender decides to grant you the loan, they provide the money straight to you, the borrower.
A third-party aggregator is a completely different category. While an aggregator also collects your personal and financial information on an online loan application, that information will then be shared with several different lenders to see if any of them are willing to provide you with a loan. Your application is essentially shopped around to various lenders – all of whom can see all your personal information. The lender that decides to grant you the loan acquires the information and eventually sends the money.
It's important to understand the difference between these two to ensure that you are comfortable with the loan provider you choose and the process that they use.
Ultimately, it's up to you to decide what type of loan provider is appropriate for your situation. While third-party aggregators may increase your likelihood of obtaining a loan because multiple lenders will consider your application, many prefer to apply through a direct lender because fewer parties will have access to their personal information.
That being said - don't assume that direct lenders are a one-size-fits-all solution. Below are a few questions to ask when choosing a direct lender.
While some may feel more comfortable getting a loan from a brick and mortar location, the fact is that online lenders are just as secure and safe.
Many online payday loan providers, including MoneyKey, now offer virtual assistance via online chat and a phone number to call for additional information, making the experience quick and easy, but also safe. The decision then becomes about whether you prefer an in person interaction over the convenience of an online application or an option closer to your home.
If you use an online lender – the whole process from start to finish is online, and you may find out if you qualify within minutes. If you are eligible for a loan you will receive a phone call from a representative from the lender to double check the information you supplied. If everything checks out, your approved short-term loan is deposited straight into your bank account. In some cases, you'll receive your cash as soon as the next day (or the next business day).
It's important to remember when researching loan providers that different providers are licensed to do business in different states.
For in-store lenders, this isn't a concern since only state licensed operations will have stores in that state, but it is important to look for your state on the website of an online loan provider to avoid any confusion over state laws and regulations.
Sometimes the terms are also different state to state. Most loan providers will have a list of rates and terms on their website. When you apply for a loan with a reputable lender, you will be asked to choose the state you reside in to ensure all state laws apply. If you are not asked these questions on your application, it may be best to look for another company to ensure the right precautions are being taken with your loan.
There are numerous benefits to working with a direct lender.
Security would be number one. Unlike a loan broker or matching service, a direct lender won't shop your information to various third parties, but keeps it in house.
You are in control when you work with direct lenders because you can research each lender and choose whether you want to share your information with them. If you work with a third-party aggregator, your information will be presented to a short-list of potential lenders who get to choose whether they want to work with you.
Key to deciding on which type of lender is right for you is doing your homework. Checking reviews is a great way to ensure you understand and trust the lender you are dealing with.
Use the internet to your advantage to check out the reputation of the lender to ensure you are comfortable borrowing from them. Make sure you are doing the appropriate research so you are aware of companies that might pose as direct payday lenders but are, in fact, not licensed lenders. It's also very important ensure the lender you select is licensed. Do not take out a loan unless you are able to locate a state license number.
When you apply for a loan or line of credit with a reputable lender, you should be asked to review and sign a loan agreement which details the terms of the product for which you have applied, as well as all fees and interest chargeable to you under the agreement.
If you have any questions or concerns during this process, pick up the phone and call your loan provider. Although you may be in a hurry, it's important to take the time to do your research and weigh your options to ensure you're making a responsible decision.
Reading some of the comments of other people's past experiences with the lender is also a great way to gain some insight into how the lender operates.
If you choose to borrow money from a direct lender, take the time to go over all the services that they offer. Do they offer payday loans and/or installment loans? Do they also offer personal lines of credit?
Understanding each type of loan individually will help you decide which one fits your situation.
If you are unsure of which loan fits your situation, again, contact the direct lender by phone or via online chat before committing. They all have knowledgeable and experienced customer service representatives who can help you understand what makes the most sense for your specific situation, and how you can keep interest payments and other charges to a minimum.
Ultimately, it's up to you to decide what type of loan provider is appropriate for your situation, so take the time to read up on what's involved before you apply.
Don't assume that direct lenders are a one-size-fits-all solution. Stick with those lenders that are state licensed. These licenses are issued to protect consumers from predatory lending scams, and only state-licensed lenders have proven their rates, terms, and conditions abide by the law.
Most important, do your homework and make sure who you are looking to borrow from is legit – and isn't going to shop your personal information around, charge hidden fees or interest charges, and not share your personal information without your consent.
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