What are Online Loans?

We all suffer from the unpredictability of life at some point in our daily routine. You may come up against times when you need extra money, whether it is to cover the medical expenses or cost of a car repair or you need to buy a gift for your beloved ones. In these times when you need fast access to money, getting an online loan may be a considerable option.

Online Loans

Online loans are a relatively fast and simple option to get hands-on money compared to the traditional lending methods when you have to physically go to a bank or pawn shop and go through a tedious and time-consuming application process. But you are just a few steps away from getting money if you apply for an online loan via crediteck.

Are online Loans Safe?

So long as you beware of predatory lenders and remember to do your homework, the answer to this question is yes, online loans are safe. You should select a good online lender offering the most convenient and elaborative terms and conditions. If you think something is suspicious about the loan conditions, ask your lender to give detailed facts and figures.

How does an Online Loan Work?

Online borrowing consists of a couple of simple and straightforward steps explained below:

Submit an application

Select an online lender and fill out their application form providing necessary information and submit your application.

Assessment Process

After you submit your application, the lender will review the information and documents you provided to decide whether or not you are eligible for a loan. This process should take not more than a few hours unless there is any complication concerning your information.

Get an Offer

Once the lender has reviewed your application, an offer including the terms and conditions of the loan will be sent to you. Analyze and accept the offer, and sign the application if it deems satisfactory.

Receive Decision

Within a few hours after you sign the application, the lender will let you know about their decision that is most likely to be a positive one. It is quite rare that a loan application is denied.

Receive The Funds

If your loan application gets approved, the loan amount will be deposited in the bank account you provided in your application form. You can withdraw or spend the money right away.

Make Payments

Once you have received your loan amount, the loan period is started tout de suite. You are obliged to make regular payments according to the schedule you agreed to until the full loan amount, including interest, is repaid.

Basic Requirements

Different lenders have their own unique eligibility criteria and require different information for a loan application but all lenders usually demand the following information:

  • Contact information
  • 18+ years of age
  • Social security number
  • Source of income
  • A valid bank account
  • Credit history

Things to Consider When Applying

Your Credit Score:

Lenders look at your credit score to estimate what kind of liability you could be for them. Your credit score affects the terms and conditions of the loan, especially the interest rate and APR. The better your credit score, the better are your chances to secure the loan at the most favorable terms. If you have a bad credit history, the interest rate and other fees are likely to go up. So, it is always wise to try to improve your credit score.

Extra Costs:

Not all lenders give detailed information about the fees associated with online loans. You may likely end up paying some hidden fees like the origination fee, closing fee, administration fee, late payment penalties, early payment fees, etc. So, it is always wise to account for these hidden fees while applying for an online loan.

Pre-qualification:

The lender will pre-qualify you at the beginning before approving your loan application and may ask you to fill out a form asking for more detailed information on your credit score, current occupation and income, and any outstanding debt.

Benefits of Borrowing Online

Some people may feel uncomfortable with the idea of applying for a loan online. But before you eliminate online lending from your financing options, take a look at the benefits of online lending given below:

Instant Approval:

The approval process for online loans is usually rapid and you can get your hands on the money within hours. The application process is quite simple, the borrower will shortly be informed whether their application is approved or rejected, how much they can borrow, and cost of the loan. While banks take quite a long time to review your application and inform you about their decision.

Competitive Interest Rates:

The interest rates and other charges which online lenders offer can be more competitive and lower than other lenders such as banks, pawnshops, and credit unions. Online lenders have a competitive advantage in the lending market as they don’t have to pay for a physical branch so they offer low overhead costs.

Easy to get Approved:

Individuals with a poor credit score or those who are still in the process of building credit history can not enjoy loans from banks and other traditional lenders. Banks are usually not willing to take a risk, so they offer loans only to individuals with excellent credit scores and strong credit history. To evaluate an applicant’s creditworthiness, online lenders use other information such as income and bank statements. That’s why online lenders are more likely to help out individuals with bad credit.

No collateral required:

In the case of a secure loan, the borrower has to pledge assets like a home, car, jewelry, etc. to obtain a loan and is always at risk of losing the asset in case of a default.  Fortunately, online loans are usually unsecured loans meaning that the borrower doesn’t have to put any asset as collateral against the loan amount. Defaulting on an unsecured loan wouldn’t affect the assets of the borrower but his credit score may get a serious hit.

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