Online Loans Vs Face-to-Face - Which Is Best?

Nathan J. Lee - 2019-01-20 14:16:13

The range of personal loan options has expanded significantly due to the emergence of online lenders. The application process is brisk and you can receive funds within a day which is substantially faster compared to traditional loans offered by banks.

A recent study by Experian claims that personal loans offered by online lenders have more than doubled in 2019 compared to 2015. They have captured large parts of the retail lending business and now banks are also moving online with their offerings.

The Factors To Consider

Should I apply for a loan online or in person?

Increased competition between lenders has given borrowers more options to choose from. However, before you decide between online and traditional options, here are a number of factors to keep in mind.

Trust And A Personal Touch

If you are accustomed to visiting your local bank branch, you may be asking: Is it better to apply for a loan in person?

At a bank you receive a personalized experience and the branch is already familiar with your financial status. Through personal interaction, you may get better attention and also added security.

Additionally, if you have any concerns or want better interest rates, dealing with a banker face-to-face can help. However, these consultations may cost you given banks tack on consumer operational costs which can increase borrowing fees.

Speed

If you have an emergency, online lenders are a good option. The application process is quick, and you might get the funds within a day. When you opt for banks, the process is usually lengthier and could be delayed, especially during weekends or public holidays.

Online lenders can also help you speed up your research and comparison efforts if they share their rate details upfront.

Rates & Fees

Rates, fees, and terms are the most important factors that influence your borrowing decision. It should not matter if the loan is coming from a bank or an online lender if you base your decision on these factors.

When you do some research, certain online lenders help you pre-qualify and assess your potential rate. When you have a poor credit score or you are not borrowing for regular reasons, a credit union can be a good option. They may take on the risk of lending to you if an online lender or bank does not.

The Advantages Of Borrowing Online

Borrowing from an digital lender has its advantages:

Easier Process - With rapid processing you can find out your approval chances, the amount you can borrow, and repayment terms quickly. Interest rates also tend to be lower compared to banks. So are the fees because there are fewer overhead costs relative to banks and credit unions.https://bestinstallmentloans.com/bad-credit.html
Better Approval Chances - When your credit score is not so good, banks and credit unions will likely not approve your loan. Online lenders make use of alternative factors like debt-to-income ratios and utility payments to determine your creditworthiness. You may have better chances of approval compared to banks.
No Collateral - Online loans are usually unsecured, which means you do not have to keep collateral. If you cannot maintain payments, your credit scores will drop, but your assets will remain safe.

How To Find An Online Lender

Before finding a lender, consider these factors that can help you make an informed decision.

Know Your Requirements - Outline a draft budget that shows why you need financing. It will help you determine how much money you require and if the lender can meet your expectations.
Identify Your Credit Score - Credit history and score are the most important factors that lenders consider with your application. If your score is bad, take steps to improve it.
Check If The APR Is Below 36% - A 36% APR (annual percentage rate) is considered an affordable interest limit for borrowers. Anything above this limit is considered high, making it more difficult for the average borrower to afford repayment.
Do Your Research - Compare the rates offered by different lenders and their terms to figure out the best option. You must also look for a lender that does not charge prepayment penalties.
Keep Your Documents Ready - Getting quotes from different lenders can take up time. Therefore, keep your personal details, Social Security number, income information, and ID handy so you can use them a number of times.

Conclusion

If you want personalized attention and security, selecting a bank can be your best bet. However, if you have an emergency with an added disadvantage of a bad credit score, an online lender will be the best option.

Of course, always consider other relevant factors like the rates, fees, and terms to make an informed financing decision.