It’s safe to say that the world is quickly transitioning into a fully digital era. Almost anything and everything that you could possibly want to do can now be carried out online, e.g., shop, order food, or even take out a loan.
This means that while it used to be mandatory to head to a physical branch to apply for a personal loan, nowadays you can get quick online loans from CocoLoan, where the process is as simple as clicking a button on your phone. However, many people are not familiar with what these loans are, how they work, or whether they can be trusted or not.
As such, we put together a short article that should help you make a decision on whether or not these loans are well-suited to you and your needs. So, let’s get started!
What Is an Online Loan?
An online loan is essentially a form of credit that a prospective borrower can apply for through the internet without having to submit an application through a traditional bank or credit union. This enables loan applicants to prequalify without having to deal with hard credit inquiries, which can often end up having a negative impact on their credit score.
CocoLoan co-founder Sarah Ross also went on to add, “The benefit of online loans is that they offer borrowers streamlined application processes, relaxed qualification requirements, and also faster funding speeds, compared to traditional loans.” This makes them a more attractive option to consider should you find yourself in need of urgent funding.
What Should You Choose Online Loans?
Online loans provide borrowers with the opportunity to fill out all the necessary details that they need online without ever having to leave the comfort of their own homes. This means that you don’t have to waste time or energy going to your local bank or credit union and going through the arduous process of waiting in line for hours. Also, since the entire process is usually handled online, there is very little paperwork required.
#2. Lower Interest Rates
Most online loan providers don’t need to pay any rent for physical office spaces, and with no overhead, online loan providers are usually able to offer borrowers much lower interest rates compared to traditional lending institutions. Furthermore, most online loans tend to come with fixed interest rates, so it is usually easier to pay off these loans faster compared to credit cards that use variable rates.
#3. Good Credit Builder
Online loans can be a great way to repair a poor credit rating since they typically come with less stringent eligibility requirements. As a result, it is very easy for borrowers with bad credit to qualify and start making repayments that will allow them to bolster their credit ratings.
#4. Fast Financial Relief
Online loans provide people with an opportunity to access fast funding, with most lenders even able to process loan applications within the same day of approval. This is in contrast to traditional lenders like banks and credit unions, which often take days to deposit the funds in your account.
Why Should You Consider Using an Online Lender?
Most online loan providers are open to considering borrowers with a history of bad credit, compared to traditional lenders like banks and credit unions that usually have stringent credit requirements. This makes them a great place to turn to if you need funding urgently but your credit score is less than stellar.
Furthermore, online lenders typically process loans much faster than traditional lenders, which often take days, if not weeks, to review and transfer your approved funds. This is because most online lenders use automated systems that ensure your loan request is reviewed quickly and efficiently.
In addition, they are more accessible since most of them are usually open to reviewing and processing loan requests at any time and on any day of the week. As a result, you can often rely on them to help you deal with an unexpected financial emergency.
Finally, while most traditional lenders tend to have a narrow view of the types of clients they prefer to work with, online loans are available to anyone, even if you are still young and haven’t had time to build a sufficient credit history.
How To Properly Vet An Online Lender?
If you find yourself looking to secure an online loan but have no idea which lender to use or how to pick the right one, there are a few steps that you can take to get a sense of how trustworthy a lender is:
#1. Check if they are registered.
Legitimate lenders are legally required to register in the state where they are conducting business by the Federal Trade Commission (FTC). The easiest way to ensure that a lender is registered is to look them up on a search engine combined with the words “state licenses.” You may have to scroll down the page, but you should be able to find a list of the company’s registration numbers. If not, contact the lender and request their registration number.
#2. Reach out to the state attorney general
The state attorney general is put in office to protect your interests. This means that in such situations, you can reach out to their offices to ensure that the lender you are thinking about working with is registered with the proper authorities. In most cases, all you will need is the company name, and they should be able to provide you with clarification on the matter.
#3. Check online reviews and past testimonials
If you want some clarity on whether a company can be trusted or not, your best bet is to look for any past client testimonials that would indicate how reliable or unreliable they are.
You can check sites like the Better Business Bureau, Google Reviews, TrustPilot, and Yelp, as well as online review articles, for more information. This should give you a sense of what to expect since it is difficult for a bad player to keep any fraudulent or predatory lending practices out of the news.
#4. Ask friends and family
Friends and family are an effective way to find out if the company in question can really be trusted or not. If they have taken a loan from a certain online lender, they will be able to give you a detailed breakdown of their personal experience, including who they worked with and whether or not they would consider borrowing from them again.
Bottom Line: Are Online Loans Safe?
Yes. Online loans are generally safe because all legitimate loan providers are legally required to follow the same strict lending rules as banks and credit unions. However, that’s not to say there aren’t any bad players to be cautious of, as there are some predatory loan providers that use unscrupulous lending practices to take advantage of unwitting consumers.
Luckily, this article should have made it easier for you to understand how online loans work and what to look out for when borrowing them. And while it is true that there are some bad apples to watch out for, it often helps to use a credit broker like CocoLoan.
Such online services can make it easier for you to find reliable and trustworthy lenders without much difficulty. Just keep in mind that if you do decide to borrow an online loan, you should only accept an offer if you are confident in your ability to repay the loan. Otherwise, you could find yourself subjected to high late payment fees or, worse, end up in bad debt.