Approximately 12 million Americans take out some type of online loan each year. While this is the case, many people still overlook the benefits of online loans when they are in a financial pinch.
When unexpected expenses come up, such as a broken-down vehicle or medical emergency, these loans can be real lifesavers.
If you are one of the people who has never utilized one of these loans, now may be the time to learn about them. Keep reading to find out about the many appealing benefits online loans have to offer.
What’s the Appeal of Online Loans?
Online loans, which can be payday loans, installment loans, and others, are available in small amounts. They are available to virtually anyone who is in a situation where they need money right away.
In the past few years, this type of loan has grown in popularity as more people are living paycheck to paycheck and need a bit of help to keep things paid each month.
If you are in a situation where you need money fast, then you should seriously consider an online loan. Some of the specific benefits offered by these loans can be found here.
1. Superior Convenience
One of the biggest advantages of online loans is that you don’t even have to leave the house to apply. This means you can handle the process when you have a spare five minutes.
What’s even better, you don’t have to get dressed, or even leave the comfort of your couch.
What you do need is your financial information, as this is one thing that most lenders are going to want to see. Once you have your financial stats in hand, you’ll find the forms are pretty easy to fill out.
When it comes to loans, you won’t find a process that’s more convenient than an online loan.
Being able to apply online for the loan means that you don’t have to worry about anyone (such as nosy family members) applying for your online loan.
If you are like most people, you want to keep your financial matters private. If this is true, then it may be beneficial for you to apply in the privacy of your own home.
Also, you don’t have to worry about being questioned about why you need the money. With online loans (unlike at traditional banks) the lender isn’t going to ask you how you plan to spend the money, which is another appealing factor.
3. Lower Rates
Because online lenders don’t have the additional expense of having physical offices scattered all over the country, they often offer much lower rates and fees. Also, the interest rates are fixed, so you don’t have to worry about them changing through the life of your loan.
This is especially beneficial if you need to consolidate your loans, such as student loans or if you want to pay less interest.
4. Easier Access
Traditional banks are notorious for being extremely picky when it comes to lending money. What this means is that it’s much easier to be approved for an online loan.
Keep in mind, there are some loans that require you to have a decent credit score (keep in mind, not all online lenders require this).
For example, there are some peer-to-peer lending sites that pitch your loan to individual investors. If they are willing to take the risk, you can get approved, even with a lower credit score.
5. Fewer Loan Restrictions
Online loans are typically flexible. You can use the money for anything, such as a car. If you take out a car loan, you will make payments to the lender who provided the money, for the vehicle. With an online loan, you determine how you spend the money you receive.
This level of flexibility provides you with more independence. If you are young and just starting out, this option is usually appealing. It can help you avoid having to ask your parents for money if you are short at the end of the month.
Another example of the benefits of online loans is when you compare it to a cash advance loan. If you try to get a cash advance with a credit care, you are going to be limited. Even if you have a $1,500 limit on your card, you may only be able to access $500 as a cash advance.
With an online loan, this isn’t the case. You can get the amount that’s based on your income.
6. Protect and Build Your Credit Score
An online loan can cover your emergency situation and give you a loan without requiring a credit check. This can help you avoid a hit on your credit score.
If you continue to pay your bills on time, you will prevent any other negative marks on your credit score, too.
What’s even better, by paying your online loan on time, you are helping to establish good credit by keeping your accounts current. If you have bills that include a credit card, making sure your payments are on time will help build your credit score.
7. Save on Potential Late Fees
Many people take out an online loan because they are facing an emergency situation. They can then use the funds received to pay their bills. By paying your bills on time with the help of an online loan, you can avoid late fees.
The fact is, bounced check fees and late fees can add up quickly. You can even cause an overdraft, which causes even more fees. All of these charges are going to add to your total debt.
With an online loan, you can easily save stress and money. The funds of the loan can be used to help you deal with your financial problems and ensure you don’t get into new ones.
8. Shorter Term Loan Period
You can find online loans that are offered for a shorter term. For many, the goal is to pay off the loan by the time you receive your next paycheck.
This can be a huge benefit to know that you won’t be facing new debt for months or even years when you take out this new loan.
While you can find any amount of online loan, there are smaller ones that make it easy to repay. In most cases, your income is going to determine what you qualify for. This means you are less likely to receive funds you won’t be able to repay.
9. More Convenient Operating Hours
You will find that online lenders are available when you need them. In fact, these lenders are usually available 24 hours a day, seven days a week. You can even apply for a loan on bank holidays, after traditional business hours and on the weekend.
Online lenders also make it easy to get in touch, even though you aren’t going to a physical location to get your funds. In most cases, they will have customer service phone numbers, as well as chat features on their website. This means if you have questions, you can easily get in touch with someone to help you out.
10. Faster Processing Time
When you request an online loan, it will only take a few minutes to find out if you are approved. In fact, there are some online loans that offer a guarantee you will receive your money within an hour of your request being approved.
With a traditional loan, this can be extremely challenging. The approval period is typically much longer. In fact, a bank may drag it on several weeks, leaving you to try and figure out what you will do about your financial situation.
When you opt for an online loan, then you won’t have to wait.
11. Credit Scores Aren’t a Huge Factor
You don’t have to have stellar credit to qualify for an online loan. Even if you have bad credit or no credit, that’s often fine.
You can still find an online lender that will take the risk and help you get the funds you need. If you went to a bank or another traditional lender, you need a high credit score to qualify for the loan. This makes it impossible for some people to go this route.
Online Loans: Are They Right for You?
If you find that you need a bit of extra help, then there’s no question that an online loan can be a great option. Be sure to find the right lender, though. There are some subpar lenders who may charge you excessive interest, so doing your research is a must.
More information about online loans and the many benefits they offer is available at the learning center.