An online loan is a type of loan that is easy to access from the comfort of your home. The top online lenders let you apply virtually without having to visit a loan office, and your funding is automatically sent to your bank — sometimes in as little as 24 hours.
Online loans are advantageous because they're easier to access than loans from traditional financial institutions. Without a brick and mortar building to maintain, online lenders can also offer funding with better rates and terms.
Reasons to Get an Online Loan?
There are an endless number of reasons to apply for an online loan, including the most common ones we list below:
- High-Interest Debt: You need to consolidate high-interest debts and you want to secure a lower APR and a fixed monthly payment you can afford.
- Higher Education: College expenses are coming up and you need funding to cover tuition, fees, and living expenses.
- Wiggle Room: You're short on cash to pay your bills this month and you don't want to fall further behind.
- Home Upgrades: Roof repairs and other home upgrades are on your agenda, but you don't have enough cash to pay upfront.
- Big Expenses: You have a large expense coming up and you need cash to cover it.
- Major Purchases: You want a way to pay for home improvements, a wedding, or the vacation of your dreams.
- Business Growth: Small business funding is crucial if you want to grow your business, and you need a lender that can help.
How to Apply for an Online Loan?
The process involved in applying for an online loan can vary widely depending on the lender, yet most applications require the same basic information. The following steps can help you apply with the best online loan company for your needs.
- Step 1: Assess your borrowing needs, and look for a lender that offers loan amounts that fit with your goals.
- Step 2: Compare the best online loans and their providers to find out which ones offer the type of funding that suits your needs best.
- Step 3: Check your rate with at least three different lenders so you can compare offers.
- Step 4: Compare loan terms offered to you, and see how their monthly payment options stack up.
- Step 5: After you compare reputable online loans based on their features, see how they compare in terms of their fees.
- Step 6: Choose an online lender and move forward with your loan application
- Step 7: Fill out all the information they require, which will likely include your name, your contact information, your address, your Social Security number, and more.
- Step 8: Wait to see if you're approved for funding, which could happen within a matter of minutes or within a few days.
- Step 9: Wait for your loan funds to show up in your bank account.
- Step 10: Begin making payments on your online loan based on the payment plan you agreed to ahead of time.
Pros and Cons of Online Loans
Online loans offer a convenient way to get funding, but there are advantages and disadvantages to be aware of. Read on to learn the pros and cons of working with legitimate online loan companies.
- Convenient Applications: Borrowers can complete the entire application process without having to speak with a loan officer or visit a loan office in person.
- Flexible Loan Options: With so many reputable online loans available, you can choose from several lenders that offer repayment plans or monthly payments that could work.
- Easy Comparison Shopping: Online loans make it easy to compare lenders based on their loan terms, rates, and fees
- Competitive Rates and Terms: Many online lenders offer competitive rates and terms that can make borrowing very affordable.
- Broad Approval Requirements: There are online lenders that work with borrowers with any type of credit profile, from excellent credit all the way down to no credit.
- No Personal Touch: You may apply for a loan and get funding without ever speaking to a live human being.
- Online-Only Service: Online lenders do not have branches you can visit if you want in-person customer service or assistance.
- Spam Emails and Calls: Checking rates with several online lenders can leave you getting spam emails and phone calls for months
Online loans can be used for a variety of purposes, and the lenders that operate in this space tend to be fair and reputable. That said, you should take the time to compare the best online loans based on their features and fees, and don't stop looking until you find a lender that offers exactly what you need. Once you're ready, online lenders let you apply and get funded without ever leaving your home.