Pros and cons of online loan application

Getting a loan from the bank or other institutions can take a while before you get approval. If you need quick money, you can consider an online loan application. You no longer have to wait a week or a month to get approval for the loan you need.

It may feel like an online loan is a great way to get some cash fast. In addition to the many advantages, it also has its downsides. So what are the pros and cons of an online loan?

advantages

First, let’s take a look at the benefits you can enjoy by getting this type of loan.

1. Easy Approval – It is much easier to get approval compared to other loan types. Online lenders often have low criteria that you can easily meet to get approved. These may include a stable source of income, a bank account, and being of legal age.

Even if you have bad credit, there are online lenders that offer online lending services tailored to your needs. If you apply for a loan from the bank with a negative credit rating, your application will most likely be rejected.

2. Less Hassle – The tedious part of applying for a loan from banks and other institutions is the paperwork that you have to submit and fax to them. You must submit the correct credentials to receive credit approval. However, when you apply for an online loan, you don’t have to face the same tedious tasks. All you have to do is fill out an online form and you’re done.

You no longer have to queue or travel in person to the bank or other institutions to apply for the loan. This saves you time and energy as you can do this from the comfort of your own home using your computer.

Disadvantages

Although there are many advantages that can make an online loan application very attractive, it also has its downsides.

1. High Fees and Interest Rates – Professionals would advise against taking out this loan unless the need is urgent. Online loans have higher interest rates and fees compared to regular loans.

Apart from the high interest and fees you have to pay when you apply online. You will also have to pay a fee if you are late with your payment. Most late repayment fees charged by online lenders are quite high as they can range up to double or triple the amount borrowed.

2. Short Repayment Rate – Ordinary loans from banks and other institutions can give you a repayment plan that spreads out your debt payments over a long period of time. Repayment can be made within a year or two if you get a regular loan. However, an online loan requires you to pay off your debts within a shorter period of time. it can be within two weeks or a few months.

3. Vague explanation of terms and conditions – Some loan services may have certain terms and conditions that put you in a high-risk situation. This is often hidden or made unclear on purpose as they do not want you to know about it.

While useful, there are things you need to consider before submitting an online loan application. You should always weigh the pros and cons before committing to anything.