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What are the benefits of getting an online personal loan?

Sunday, May 22nd

What Are the Benefits of Getting an Online Personal Loan?

Most people would benefit from extra cash in their hands from time to time. While you could consider asking a family member for an off-the-books loan, a preferred option is to apply for an online personal loan. An online personal loan gives you a lump sum of cash today, and you can make manageable installment payments to repay the borrowed funds.

An alternative to an online personal loan is a personal loan from a bank or major financial institution. Both options could result in you getting the funds you urgently need today with the requirement to repay the funds with installment payments. However, online personal loans come with some benefits that you will not have access to if you walk into a bank to apply in person. What are the advantages of applying for an online personal loan?

A Convenient Application Process

The traditional method of applying for a personal loan involves taking several hours out of your day to apply in person at a bank. Often, an applicant would need to schedule an appointment with a bank rep ahead of time. He or she would need to bring all of his supporting documentation to the bank, such as paystubs, tax returns and more. This process was unnecessarily time-consuming and stressful.

When you apply for an online personal loan, the loan application portal is available to you at all hours of the day. Banks have limited hours of operation, so the ability to apply online early in the morning, late in the evening or at another time that is convenient for you is truly beneficial. Generally, you will also find that the online application process for a personal loan can be completed faster because you do not have to waste time driving to and from a bank.

Fast Processing for Urgent Needs

In many cases, those who are interested in applying for a personal loan have an urgent need for funds. If you choose to apply in person at a bank, the loan representative who assists with the completion and submission of your loan request is not the same person who will approve the loan request. After you leave the bank, the loan will enter a queue for loan approval. It may be several days before you learn about your approval status, and it may be several additional days until you have access to your funds.

On the other hand, many online lenders have an automated approval process. All of the data that they need to approve the loan is entered into the system already, so the automated approval process can be completed within a few hours or less. More than that, the funding process may also be automated. Once your loan request has been approved, funding may take place within a few more hours. In fact, many applications for online personal loans can be approved and funded within a few days or less. When you have an urgent need for funds, an online personal loan may deliver the results you need in a timeframe that works well for you.

An Easy Way to Comparison Shop

You understandably do not want to pay more than necessary for your loan. Both the interest rate that you receive and the loan fees that are charged will impact the total cost of financing. The cost of financing can vary dramatically between various banks and lenders, so you could save a bundle of cash by shopping around. Online lenders generally publish their interest rates and fees so that you can comparison shop before you apply. However, regardless of whether you apply in person at a bank or online, your actual interest rate may vary depending on your credit score and qualifications.

Access to a Variety of Options

Do you want to repay your personal loan as soon as possible by taking out a short-term loan? On the other hand, you may have a tight budget, and you may need to set up the most affordable loan payment available. Many online personal loan companies offer a variety of loan terms to meet various needs. There is not a one-size-fits-all personal loan that is a great match for all needs, so the ability to select from a wide range of terms is beneficial. Specifically, the range of options gives you the ability to set up loan terms that are well-suited for your current budget and for your financial goals.

Favorable Loan Terms

While bank loans are one alternative to online personal loans, credit cards are another option. Credit cards typically have high interest rates and revolving terms. This makes the debt difficult to repay, and the result is that you may be saddled with debt for much longer than you initially anticipated. While it could take you a few years to repay a personal loan with an installment payment plan, it may take a decade or longer to pay off a credit card if you only make the minimum payment.

Many people choose to pull a credit card out of their wallet to pay for unexpected expenses because of the convenience. However, money from an online personal loan could be available to you within a few days or less, and that debt may be much easier to pay off within a reasonable period of time.

Unsecured Loans Are Available

The two main types of personal loans are secured loans and unsecured loans. A secured personal loan requires you to pledge collateral. An example of a secured loan is an auto loan, which uses a vehicle as collateral. If you default on the loan, the lender can seize your car. Often, traditional banks only offer their best interest rates and loan terms on secured loans. This means that you must identify an asset of value that the bank will accept, and you must pledge it as collateral. In the unlikely event that you are unable to make the payments on your personal loan, you risk losing that asset to the bank.

Most online personal loans are unsecured. This means that no collateral is used to secure the loan. As an applicant, there is no need to pledge an item of value as collateral and to place it at risk. Because the lender does not need to value the collateral or take steps to tie it to the loan, the entire loan process is simpler and can be completed more quickly.

Freedom to Use Funds as Needed

Online personal loans are intended to be flexible to the borrower. A traditional bank loan may require you to use funds to consolidate debt, to update your house or to pay for other specific expenses. This is not the case with an online personal loan. For most unsecured personal loans, you simply choose your loan amount and your loan term. After you complete the application, you are told what loan amount and terms you are approved for. Once you accept the terms, the funds are transferred to your bank. From that point, you can use the borrowed money as desired. For example, you may choose to pay off a credit card, take a vacation or buy a new fridge. Your only requirement from that point is to make the regular monthly installment payments on the loan.

Many Advantages

From credit cards and bank loans to online personal loans, you have a few different options available to get the funds that you need. While there are benefits associated with credit cards and bank loans, you may discover that the advantages of taking out an online personal loan far exceed the advantages of other financing options that may be available to you today. With this in mind, now is a great time to start comparing rates and terms for your online personal loan.

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Personal Loan FAQ

Any way you like! Personal loans typically don't come with restrictions on how they're used. Paying off high-interest credit cards, splurging on a luxury item you've always wanted, taking a much-needed family vacation: you can use your personal loan for all of that and more.
Most banks and credit unions offer personal loans, but your financial institution might not offer the most competitive rates. There are many lesser-known sources that want to earn your business with lower APRs and more personalized attention over the life of the loan.
That depends on a number of factors, such as your credit history and income. It's definitely worth shopping around, just like you would when buying a car or other big-ticket item. Consider using a service that allows you to get loan offers from multiple lenders with a single application: that will make it more likely that you'll get the best possible rate and terms on your personal loan.
When you're making an initial inquiry to see if you qualify for a personal loan, it usually involves a "soft pull" on your credit - verifying your identity, credit score, and current debts. That will not lower your credit score. However, if you take the next step and apply for a specific loan, expect that your credit score may dip a (but only temporarily).
Most lenders allow you to complete the process online, from beginning to end. That's a big perk for people who can't get to a brick-and-mortar bank during regular business hours.
Personal loans are available in amounts ranging from $100 to $100,000. Before you get too excited and start planning how you'll spend the money, keep in mind that the amount you'll actually be approved for depends on your financial situation. The higher your credit score and the lower your outstanding debts, the more likely it is that you will qualify for a bigger loan.
The application process can be extremely fast: some lenders can approve your loan in just a few minutes. Once you accept a personal loan offer, most providers will direct deposit the funds within 1-5 business days.
As with any kind of loan, it's important to keep track of the details: don't borrow more money than you can comfortably repay, make on-time payments every month, and communicate with your lender if unforeseen circumstances arise (e.g. unemployment, natural disaster, disability) and you need forbearance or other accommodations. It's also wise to check out the reputation of the lender: reviews from previous clients and a rating from the Better Business Bureau can be very informative as you decide which provider to use for your personal loan.
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