Get Online Loans and Lending Advice.

Loan questions? Turn to the experts at LoanTruth for online loan reviews, loan advice, expert lending insights, money tools and more.

Easily compare loans and options to find the online loans that work with your credit.

Online Loans

The use and availability of online loans have steadily increased in recent years. However, there is still a considerable amount of confusion as to what online loans are and what they are not. The following will help to clear some of the confusion.

Online Loans Explained

Explained simply, an online loan involves borrowing money from lenders who allow you to complete the process completely online. The process for completing these loans are a little different from one lender to the next but many of the practices are common across the industry.

The Online Loan Process

The first step in the online loan process is to fill out an application on the website of the lender. Your creditworthiness will sometimes be checked by the lender in a matter of minutes. Based on your credit history, the lender will decide whether or not you are approved for a loan and the loan amount they are willing to provide to you.

Online Loan Safety

The short answer is sometimes. The standards for creditworthiness and other factors are often higher with traditional lenders. Online lenders often present less stringent approval standards.

This may sound like a good thing to individuals in need of money but some companies offering ‘bad credit loans‘ are a little less than trustworthy. In fact, some of these companies structure loans in a manner that it benefits them when a borrower is unable to make a payment. The missed payments will result in additional fees and interest and some of these companies depend on the extra revenue generated by this circumstance for their survival.

The credit standards upheld by traditional lenders help to prevent people from receiving loans they cannot afford. If your credit is less than desirable and you need a loan, consider a company that takes into account other aspects of your financial health before giving you a loan. Also, review companies for a history of predatory practices before doing business with them.

The Difference With Online Loans

Most people who choose online loans over those offered by traditional brick and mortar lenders cite convenience as the main factor. There is no reason for the borrower to leave their home throughout the entire process. The loan application is completed online and the borrowed funds are deposited directly into the borrower’s bank account.

The process of obtaining funds through an online loan is faster than with traditional loans. Approval decisions take place in minutes versus the days or weeks often required with traditional lenders. Money borrowed from online lenders can be deposited into the borrower’s bank account in no more than one business day.

You may also find a lower interest rate for a loan when you choose to do business with an online lender. This is because online lenders do not have the cost of operations faced by traditional lenders and some of them are willing to pass these savings on to their customers.

Online Loan Types

The typical online loan falls under one of four categories:

Payday Loans

Payday loans are loans with extremely short terms and even higher interest rates. Two weeks is a typical term for a payday loan and the annual interest rate can be 300 percent. The average amount borrowed through payday loans is $350 and the principle and interest are expected to be paid in a single lump sum at the end of the loan’s term. Many borrowers find this one-time payment difficult to make.

When you are unable to repay a payday or signature loan, lenders will often times permit a ‘rollover.’ What this means is that you are allowed to pay only the interest accrued on the loan over the two week period. This amount is usually around 20 percent of the loan principal. The lender will then reset the loan term and reset the interest rate.

It is important to note that rollovers on loans are illegal in many states. Also, some states do not allow payday loans to be offered to their residents. This means that online payday loan providers cannot do business with customers in these states.

Title Loans

Title loans share similar traits with payday loans. The terms are short and the interest rates are high. These loans can also trap a borrower into a dangerous cycle of debt. The difference is a title loan is secured with an asset like a car, motorcycle, or truck. If you do not repay a title loan, you can lose the vehicle you used to secure the loan.

Higher principals are common with title loans versus payday loans since a high-value asset is used for security. Title loans are often for $2,000 or more with a term of one month. Lump sum payments are sometimes required. The average interest rate is 25 percent and rollovers can occur when the borrower cannot repay.

Title loans are also banned in some states.

Peer to Peer Loans

A peer to peer loan is originated from individuals versus financial institutions. Many P2P loans are facilitated by online websites. These websites provide a platform for borrowers and lenders to connect.

Installment Loans

Personal installment loans are generally considered to be the safest online loan option. However, caution should still be exercised when dealing with these loans. There are installment loan providers who do not perform adequate credit checks that will guarantee your ability to repay.

Installment loans differ from payday and title loans in that repayment is on a monthly basis. The loan terms are called installment which provides the loan type with its name. These monthly payments are often easier for borrowers to make and are less likely to result in an additional financial burden.

Fast Money Online Loans For No Credit/Bad Credit

Online loans are a quick and convenient way to find money when a financial emergency occurs. However, all online lenders are not equal. When considering an online loan offering, conduct enough research to know you are dealing with a lender providing competitive terms and interest rates.

FAQ

What types of loans can I apply for online?

You can typically apply for personal loans, payday loans, auto loans, home equity loans, and small business loans online.

2. How do I qualify for an online loan?

Qualification criteria vary by lender but commonly include factors like credit score, income, employment status, and debt-to-income ratio.

3. What documents do I need to apply for an online loan?

Generally, you’ll need identification (such as a driver’s license), proof of income (pay stubs or tax returns), and bank account information.

4. How long does it take to get approved for an online loan?

Approval times vary, but many online lenders offer instant decisions, with funds deposited as soon as the next business day.

5. Are online loans safe?

Reputable online lenders use encryption to protect your personal and financial information. It’s essential to research and choose a licensed lender.

6. What are the interest rates and fees for online loans?

Interest rates and fees depend on the lender, your creditworthiness, loan amount, and terms. Compare offers to find the best rates and terms.

7. Can I get an online loan with bad credit?

Yes, some lenders specialize in bad credit loans, but expect higher interest rates. Improving your credit score can help you qualify for better rates.

8. What should I consider before taking out an online loan?

Understand the total cost (including interest and fees), repayment terms, impact on credit, and whether you can comfortably afford the monthly payments.

9. How do I repay an online loan?

Most online lenders offer automatic payments from your bank account. Ensure you have sufficient funds to avoid late fees or penalties.

10. What happens if I can’t repay my online loan on time? – Contact your lender immediately to discuss options like a repayment plan. Late payments may incur fees and affect your credit score.

11. Can I apply for an online loan if I am self-employed? – Yes, many online lenders consider self-employed individuals. You may need to provide additional documentation, such as tax returns or bank statements.

12. What is the difference between a secured and an unsecured online loan? – A secured loan requires collateral (such as a home or car), while an unsecured loan does not. Secured loans typically have lower interest rates but carry the risk of losing collateral if you default.

13. How much can I borrow with an online loan? – Loan amounts vary by lender and your credit profile. Typically, online lenders offer loans ranging from a few hundred to tens of thousands of dollars.

14. Are there any prepayment penalties for paying off an online loan early? – Some lenders charge prepayment penalties, so it’s essential to review the loan terms before signing. Many reputable lenders, however, do not charge penalties for early repayment.

15. How can I find reputable online lenders? – Research potential lenders by checking reviews, verifying licenses (if applicable), and comparing terms and rates from multiple sources. Look for lenders affiliated with recognized industry associations.

16. What is the difference between a fixed-rate and a variable-rate online loan? – A fixed-rate loan has an interest rate that remains constant throughout the loan term, providing predictable monthly payments. A variable-rate loan’s interest rate can fluctuate based on market conditions, potentially affecting your payments.

17. Can I use an online loan to consolidate debt? – Yes, debt consolidation loans combine multiple debts into one loan with a potentially lower interest rate, simplifying repayment. Consider the total cost and impact on your financial situation.

18. How can I protect myself from online loan scams? – Be wary of lenders asking for upfront fees, guaranteeing approval without credit checks, or using aggressive sales tactics. Verify lender credentials and never provide personal information over insecure channels.

19. Can I apply for an online loan if I have no credit history? – Yes, some lenders offer loans designed for individuals with limited credit history. Consider options like secured loans or loans with a co-signer to improve approval chances.

20. Where can I get online lending advice or assistance if I have questions? – Many online lenders provide customer support via phone, email, or chat. Additionally, financial advisors or credit counseling services can offer personalized advice on loan options and financial management.

Here’s a breakdown of the benefits and drawbacks of online loans:

Benefits:

Convenience: Applying for loans online is convenient and accessible 24/7 from the comfort of your home or anywhere with internet access.
Fast Approval: Many online lenders offer quick approval decisions, often within minutes, and funds can be disbursed rapidly, sometimes within one business day.
Comparative Shopping: Online platforms allow borrowers to easily compare multiple loan offers, interest rates, and terms from different lenders, helping to find the best deal.
Accessibility: Online loans can be accessible to borrowers with various credit profiles, including those with less-than-perfect credit, through specialized lenders.
Lower Overhead Costs: Online lenders may have lower operational costs compared to traditional banks, potentially resulting in lower fees and interest rates for borrowers.
Flexible Options: Online loans often offer a range of loan amounts and repayment terms, allowing borrowers to tailor the loan to their financial needs.

Drawbacks:

Potential for Scams: Online lending can attract fraudulent entities. Borrowers must research and verify the legitimacy of lenders to avoid scams and identity theft.
Higher Interest Rates: Loans from online lenders, especially those catering to borrowers with poor credit, may carry higher interest rates compared to traditional bank loans.
Limited Personal Interaction: Some borrowers may prefer face-to-face interaction with a lender for clarity or reassurance, which is often lacking in online transactions.
Hidden Fees: Borrowers should be cautious of hidden fees or penalties that may not be clearly disclosed upfront, potentially increasing the overall cost of the loan.
Security Concerns: Providing personal and financial information online carries inherent security risks. Borrowers should ensure that lenders use secure encryption and data protection measures.
Impact on Credit Score: Applying for multiple loans or failing to repay on time can negatively impact credit scores. Borrowers should manage loans responsibly to avoid adverse effects.

Understanding these benefits and drawbacks can help borrowers make informed decisions when considering online loans, ensuring they choose a loan that best fits their financial situation and needs.