Many people are turning to online loans because they think that it is an easy way to get money. While this is true, it has its disadvantages. Below are the advantages and disadvantages of online loans.
Online loans are approved faster compared to all other types of loans. Online lender follow simple criteria making it possible for many people to qualify for the loan. Among the main things they will ask you is whether you have a stable income, if you have a bank account and if you are of the required age. You will be surprised to qualify for the loans even if you have a bad credit history. This is opposed to when you apply for a loan from a bank or any other financial institution. They will only give you a loan if your credit history is positive.
There is little or no paperwork involved when applying for online loans. If you have ever applied for a loan from the bank, you understand how much of a hassle it can be. They will ask you to fill out many application forms and avail support documents. This is not the case with online loans. They will only ask you to fill a simple application form online, and you will be done.
You will not be required to fill out an application form and travel to the bank to get a loan. Online lenders give you the opportunity to fill in the forms from the comfort of your home and get the loan instantly. This saves you time and energy. The time you would have used to travel to the bank can be used to do better things.
Many online lenders do not ask you for guarantees to get the loan. At times, you will find that you do not have anyone you can use as a guarantee because they are afraid of the consequences if you fail to repay the loan or because you do not have anyone to use. Online loans have made things easy because you can now get a loan without a guarantor.
High Interest Rates
Some online loans have high interest rates and other hidden charges compared to other loans. Financial professionals advise that you should only apply for these loans if you are in real need or in an emergency. If you fail to repay the loans within the expected time, they attract extra charges. These charges are so much that they can end up doubling or tripling the principal amount.
Short Repayment Time
Banks and other financial institutions give a considerable repayment period. You will find that a conventional loan is to be repaid in three years. This is not the case with online loans because many of them should be paid within two weeks or a month.