But it’s encouraging to know there’s a way out of economic traps when we need them.
Borrowing money online has never been so easy. In the digital age, we don’t have to pack up our entire monetary folder and run down to the bank. Help is an enter button away.
Circumstances may extend from the mortgage to things else like the car note or childcare. Whatever the need, people find monetary relief for it online.
With information at a tap away, it’s no surprise that applying for online loans is easy. Discover 10 ways why it’s simpler than ever.
1. Increasing Convenience
Before computers and the internet, people had to apply for loans the old-fashioned way. That meant you had to have some solid bookkeeping because banks required a lot of information.
Borrowing money was like an event. You had to gather all your financial documents, drive to the bank, then spend time filling out paperwork. Waiting for an approval was even worse.
The process worsened if the bank required more stipulations like collateral or a cosigner. For some loans, they still do this today. But for the most part, online loans have eliminated tons of paperwork and drivetime.
Borrowers can get the help they need from the comforts of their own couch or kitchen table.
In most cases, all you need to do is fill out a few, quick questions on an online form. Within seconds to minutes, an approval returns.
2. Specified Loans
Banks lend money based upon lending standards. That means you’re locked into a certain amount based on your approval profile.
For example, you need $1500 for car repairs but the bank doesn’t lend anything less than $3000. You take the $3000 but then you’re stuck with higher payments and more interest. Plus, it takes longer to pay back the $3000 than the smaller amount you requested.
One of the best advantages of online loans is you get to specify a loan amount up front. And even if you’re approved for a larger amount, you can stick with what you need.
There’s no pressure or lender stipulations to take more.
3. Better Rates
Banks are about big business. And most lending institutions have either several local branches, or they’re countrywide.
Whatever the case, it costs to run a business like that, and banks have to recover those funds one way or another.
Interest rates are percentages of the borrowed principal-the money you borrow. Lenders charge these rates as a fee for using their money. But not all lending banks charge the same fixed rate. Why? Two words: profit and competition.
Banks compete for borrowers, and they use fluctuating interest rates to do it. At the same time, their ultimate goal is to make money. Having low to bad credit is another concern.
Some banking institutions may approve you for a loan but penalize you with a higher interest rate because of your credit score. You can catch a break with online payday loans.
Most online payday lenders don’t have the added expense of brick and mortar buildings scattered around. So their overhead is low, which makes it easier to offer borrowers lower and fixed interest rates.
You also get the advantage of paying off the loan at the same rate for the life of the loan term.
There are 86,400 seconds in a day. Nobody has time to way any of them, especially when you’re in a financial bind.
The approval timeframe for traditional bank loans takes time. Depending on the size of the loan, a borrower could wait 2 to 14 days to get approved. And that’s if they meet the required stipulations from the bank or credit union.
Sometimes, the notification of approval gets sent by mail. That’s another 7-10 days. Most financial emergencies can’t wait that long.
With online loans, borrowers can bypass conventional loan approval processes. The speed of the internet and ease of the process makes for faster turn around times.
There are no lengthy paper forms and most lenders on the web approve within minutes. Some less than that, when you provide everything they need upfront.
After you’re approved, you don’t have to wait for a check in the mail. Lenders online can have the funds deposited in your account within hours. At the very latest, you’ll receive funds the next business day.
5. Minor Requirements
Conventional loans don’t shy away from heavy paperwork. You may have to dig into the file cabinet or storage box for old information.
Some bank lenders are fickle about the way they lend money. So they require a paper trail of financial documents to prove you can afford the loan and pay it back.
Traditional stips are as such:
- Paystubs – Lenders need to verify your work.
- Bank Statements – Banks looks at these to see if what you make matches what’s on your paystub.
- Tax Returns – You would think of a pay stub and a bank statement as being acceptable enough. But, no. Banks use tax returns to establish the length of employment.
- Credit card and other loan statements – If you’re indebted to other lenders, banks take that into consideration before they give you money. Even if your credit profile is sufficient, they still want to know.
- Rental/Mortgage Payment History – Sometimes your debts matter more than your income to some banks. And they’ll deny you for the same reason.
- Other sources of income – If you lose your primary job, can you pay back the loan with other sources of income? Banks sometimes use this to determine the size of your loan as well.
Now, take all of these stipulations and reduce them down to a steady source of income. You just specified the major requirement for an online payday loan.
Along with being 18 years of age and having an open, active checking account, you could get approval right away. The only other requirement is being a permanent resident in the state you’re getting the loan.
Bad credit is not an automatic denial. If you can prove you can pay it, an online lender may approve your loan right away.
6. Loan Amounts
Banks set restrictions on how much money you can borrow based on their assessment of your finances. Even if your income denotes you can afford a larger loan, the institution may approve you for a lesser amount.
For example, you need $3000 for emergency car repairs. Your monthly income is three times that amount, proving you can afford the payment. But because of your credit score or time on the job, the bank will only approve $1500.
Payday lenders approve loans you can pay for. Sometimes the more money you make, the greater the loan. Then, they reward you every time you pay off a loan.
If your initial loan was for $600 dollars, online lenders may increase your next loan amount once you pay it in full. Standard loans don’t come with this comfort.
Nobody plans for a hardship. So if you fall behind on your mortgage payment, the bank shouldn’t throw the whole borrower away. Sometimes they do. Most banks aren’t lenient when it comes to assisting with a lagging mortgage payment.
Their systems work off a strict amortization schedule and altering it could risk profit for them. Banks don’t want to lose money on interest and fees. Sometimes they’ll wait until the loan’s at risk to offer any assistance.
Payday loan lenders are more reliable. If you meet their requirements, expect the help. And that help normally comes right away.
Unlike credit unions and banks, if you can’t make a payment, some online lenders will allow you to skip a payment.
There’s zero anonymity when applying for a bank loan. Here’s why:
- Banks worry whether you’re likely to pay the loan back or not.
- If you can’t pay it, they want to know what can they seize of yours to cover the money you owe them.
From their perspective, if you have a specific purpose for the loan, you’ll handle it responsibly. That also helps them determine if they want to offer you a secured or unsecured loan.
With a secured loan, banks require borrowers to put up a valuable asset. And if they default on the loan, the lender cashes in on the asset to cover the loan. Unsecured is the opposite. However, as mentioned earlier, you must meet the lender’s qualifications to get either.
What’s unfortunate is that you have to go through the explanation process as part of the loan procedure. There’s no saving face for an embarrassing financial situation.
Online loans let you ask for help while still retaining some pride about your predicament. The important part of the process is that you meet the requirements and can pay back the loan. There’s no chiding nor denials for why you need assistance.
9. Safeguard Your Credit Rating
Normally, when you need a personal loan, it’s a quick financial solution to a short-term problem. There’s no need to get the credit bureau involved.
That’s not the case with standard lending institutions. All conventional banks report to the credit bureaus. They report on-time payments as well as delinquencies. Even if you borrow as little as $1500 dollars, it’s reported as debt on credit profile.
It’s the same for credit unions as well. Why? Because they’re required by law. Some report to all three bureaus-Equifax, Transunion, and Experian. Others report to one due to costs being associated.
Other types of creditors are not legally forced to report debt, which is a plus for people owing online loans.
The bigger issue is even with small personal loans, banks can stretch the installments out. After interest and fees, a compact loan can take almost two to three years to pay off. You would’ve paid the loan almost twice by then.
Most online lenders do not report to the credit bureaus, and they offer unique pay methods. Borrowers can repay the loan biweekly for set a number of payments. They can also pay the loan off early without penalty.
Don’t be mistaken, you still have an obligation to repay the online loan to avoid litigation. But while you’re making faithful payments, you don’t have the dread of years ahead of you.
10. No Cycle of Debt
Unless you’re extremely affluent, borrowing is a way of life for almost every consumer. Whether it’s a mortgage, car note, or student loan, at some point everyone becomes indebted.
That’s not a bad thing if you can manage your finances in an effective way. The problems come when other frivolous obligations get thrown into rinse. Credit cards are to name a few. They murky up your monthly finances, throwing things out of whack.
Instead of finding the right, immediate solution, consumers let financial troubles fester. One month behind becomes two months and so on. Then the sequence of unfortunate financial events begin.
The cycle of debt happens when people spend more income than they bring in. It’s the long-term effect of continuous borrowing -robbing Peter to pay Paul.
At some point you start using other debt to pay off other debts, drowning further into the debt cycle.
Naysayers try to throw payday loans in the mix, but that myth gets arguably debunked. Online loans are short-term loans. Your income sets your limit every time you borrow. This ceiling works in your favor, keeping you from taking more than you can afford.
You also have the option of making principal payments to reduce the amount of the loan. Smaller principal decreases the length of the loan, helping you pay it off faster. The reverse happens with long-term loans.
Long-term loans carry more interest, extending the payoff timeframe, especially if you miss a payment.
Get a Loan Online
Borrowing money through online loans is fast and convenient. Consumers experience the ease of securing the funds they need when they need it.
If you’re in a financial bind and need a hassle-free solution, consider online payday loans. Always remember to borrow responsibly.
Look into our personal loan options for more information on online loans.
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