How to Research Online Loans

iQuanti: Taking out a loan entirely online is a modern-day convenience that opens up loans to more borrowers. But with so many options available, the process of figuring out which loan to use can get confusing. So if you want to take out an online loan but are stuck on where to start, here's how to research online loans and what factors to consider so you can choose the right option.

What to consider as you research online loans

Any borrower looking to make the best financial move with an online loan needs to consider a few specifics, including: 

  • Credit score requirements: Online lenders often have credit score requirements listed for each loan option. And while borrowers with excellent credit scores typically get more favorable rates, there are loans available for borrowers with poor credit too. While credit score is an important factor for some lenders, others may also review income and employment history when considering whether to issue a loan.
  • Loan amounts: Certain loan options make more sense depending on how much you need to borrow. Cash advances may be capped at around $1,000 in most states that offer them. But an online installment loan could give you access to a few thousand dollars if other requirements are met. Based on your needs, choose a loan that will give you the money you need and that you can reasonably pay back.
  • Interest rates: A loan's APR (annual percentage rate) determines how much you'll need to repay over the life of the loan. And it can be smart to look for the lowest APR possible. Then, calculate the overall loan amount, including any applicable fees, like origination fees, plus interest. That way, you can plan for repaying the full amount due with interest, not just the lump sum you borrow.
  • Whether you'll need to provide collateral: Some secured loans are backed by collateral, like a house, car, or investment account. And while these loans may have more favorable rates and terms, you'll risk losing the collateral if the loan isn't repaid on time. Unsecured personal loans typically have a more straightforward approval process because lenders don't need to verify collateral.

How to find the right online loan

Once you've researched the type of loan you'll need, seeking approval takes only a few simple steps.

  1. Verify lender legitimacy with third-party sites: Check the Better Business Bureau and other third-party sites to ensure the lender is legit. And always look for signs of a scam, like a site that's not secure or one that has many errors or typos.
  2. Read real customer reviews: Oftentimes, nobody knows better what it's like to borrow from the lender than those who have done it. Reading customer reviews on various third-party sites can give you an idea of the lender's reputation in the market.
  3. Gather your paperwork: Lenders may require you to submit financial documentation, proof of identification, and bank information. Gathering this ahead of time can limit how long the application process will take.
  4. Submit an application: The application process with many online lenders will be entirely digital, so you can apply from the comfort of your home. Before submitting your loan application, double-check that all personal and financial information is complete and accurate.
  5. Wait for approval: Depending on the lender's process, you may receive approval in as little as a few minutes. But it may take longer to get a decision, depending on the lender.
  6. Receive funding: Once approved, the lender will issue a payment to the bank account provided. You may see funds in your bank account the same day you apply or within 24 hours after receiving approval. It may also take several days to receive the loan, which you can then use for the desired purpose.
  7. Begin loan repayment: With many online loans, you'll begin the repayment term immediately. That means your first payment could be within 2 - 4 weeks, depending on the loan type.

The bottom line

Finding the right online loan may seem like a daunting process. But if you take steps to thoroughly research the lender and loan first, you'll find the right loan for your needs. Be sure to compare elements like credit score requirements, loan amounts, interest rates, and collateral requirements. Then, find a reputable lender who can get you great loan terms. In no time, you'll be ready to use your loan and start to pay it back on the agreed-upon terms.

Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.

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Categories: Personal and Family Finances

Tags: loans, online loans, personal finance