Personal loans are not a novice loans. In times gone by, getting a personal loan was not so smooth. Lenders took a lot of days to process the application. Now, the scenario has changed. Online lending has become very popular. Not just direct lenders but banks and mainstream financial institutions also offer personal loans using the online system.
Getting personal loans online is very easy and convenient. Whether you are borrowing money from a direct lender or a bank, you just need to provide all your personal and financial details in the application form. The loan approval process is so quick that you will get approval the same day. The entire process takes a couple of hours, and soon after you agree to the repayment terms, money is directly transferred to your bank account.
Many people are turning to online lenders to take out personal loans, and that is because of a poor credit rating. Banks still use traditional lending criteria, which means no borrower with a poor credit score is eligible to qualify for these loans.
Although it is very convenient to apply for personal loans from online lenders, you should carefully assess the pros and cons. This blog discusses the upsides and downsides of using online personal loan lenders:
What are the upsides of using personal loan online lenders?
Here are the advantages of using personal loan online lenders:
- You can easily compare interest rates
Shopping for online personal loans is duck soup, as you can compare interest rates charged by different lenders. Many websites compare the interest rates and the APRs from multiple renowned lenders. They also provide you with a calculator to understand the monthly cost and the annual cost.
These comparing websites will update you about the credit rating that lenders accept. This helps you pick lenders who are willing to accept your applications. As a result, you can avoid hurting your credit points from multiple credit applications.
- You will have an access to multiple options
One of the benefits of using online personal loan lenders is that you have a variety of options. For instance, you can consider using a bad credit personal loan when your credit file is blemished with missed payments and defaults. Likewise, some lenders provide a personal loan without a guarantor.
Some lenders provide small personal loans to fund emergency expenses only, while others provide large funding to meet planned expenses like vacations and weddings.
Some lenders are also known for providing consolidating personal loans, while others provide these loans to very bad credit borrowers as well. These personal loans are called very bad credit loans with no guarantor.
Because there are a variety of personal loans available from online lenders, you can easily choose a suitable loan product for you. There is no confusion left.
- It is fast and convenient
While banks take a couple of days to process the loan application, online lenders can do so without further ado. The entire process gets complete almost the same day.
You do not have to fill in a lengthy and complicated application form. Intriguing part is that income statements and bank statements are also turned in online. The maximum time a lender takes to complete the application process, which could be up to 5 days, depends on the size of the loan.
When the loan amount is significant, be prepared to meet additional formalities, and this is where the approval process may extend to days. However, if the amount is small and is to be used for unexpected expenses, you will get the loan approved the same day.
What are the drawbacks of using personal loan online lenders?
Here are the drawbacks of using personal loan online lenders:
- Banks could be more reliable than online lenders
When it comes to borrowing money, banks should be given priority even if your credit score is not perfect. As they strictly follow the rules and regulations of the FCA, there are chances that you will likely get the best deal.
Online personal loan lenders also provide you with an affordable deal, yet the interest rates you are charged could be relatively higher than those of banks. You will likely find yourself paying too much money to a private lender in comparison with the payments made to your bank.
If you have a good relationship with your bank, you can take advantage of reduced interest rates. Unfortunately, this cannot be possible with online private lenders.
- There is no face-to-face interaction
One of the biggest drawbacks of using personal loan online lenders is that there is no face-to-face interaction. Banks allow you to visit them, ask queries and have your doubts resolved. Unfortunately, you cannot schedule an in-person meeting with a private lender.
For doubts and queries, you will have to call the customer care staff or drop an email. Not all private lenders provide round-the-clock customer care services. Emails are responded to within two business days. It might keep you from applying immediately.
Most of the queries related to interest rates and APRs go unresolved as it is hard to be clear about them unless the application is formally put in. Some lenders are notorious for providing poor customer care services. For instance, issues related to direct debit, funds transfer, and constant withdrawals, even after the closing of accounts, do not stop.
The bottom line
It is not a bad idea to consider online personal loan lenders to borrow money. Whether you choose a bank or a direct lender for these loans, you will have to face certain benefits and drawbacks.
Borrowing from online private lenders is more convenient. You can borrow even a small amount of money at the most competitive interest rates. The loan process does not take too much time to qualify for the loan. Get money on the same day when the borrowing sum is small.
John Keats is a professional content author, specialising in writing blogs and articles covering a range of topics related to the finance and loan industry of the UK. He has been working in the UK finance marketplace since 2009. John has written hundreds of blogs and articles on diverse financial topics. John has experience in several finance areas but mainly belongs to the lending market. He has worked with many reputed financial companies and lending firms. Currently, he is the Senior Content Writer at GetLoansNow, a new-age direct loan provider offering various kinds of online loans. John also contributes to the company by preparing borrower-friendly loan deals and guiding them via his research-based blogs. John Keats has a PhD in Business and Finance from the prominent UK University and a post-graduate MBA in Finance.