You need money, and you're considering taking out a personal loan. Maybe you want to consolidate your credit debt because you're tired of multiple charge card payments and only want to cope with a single, fixed payment. Or maybe an emergency came up and also you need money quickly to pay for your debts.
A personal loan can be useful for these kinds of situations. You borrow a lump sum of cash and pay it back in fixed monthly payments over 3 – 10 years.
Now, required is where you should get the loan.
Maybe your folks are suggesting to determine a rep at the local bank or credit union. However they are not seeing those tempting personal loan offers inside your mailbox and inbox. Those offers look good, and it's hard to deny the benefit of conveniently applying for a loan online. But are these offers legit? And therefore are these online lenders safe?
To apply online or apply personally – thatrrrs the true question. We'll tell you everything you need to know about each option so you can make a decision that feels best for you.
The Distinction between Utilizing an Online Lender and the Bank
If this is your very first time completing financing application, it's normal to have lots of questions and go back and forth between utilizing an online lender or perhaps a brick-and-mortar lender. You will find pros and cons whenever using both online and in-person lenders. Deciding which is best for you is determined by your circumstances.
To help you figure things out, let's explore what you should expect from both.
Using a nearby bank or credit union
When you walk into a bank , you train with a loan officer or other representative who will ask you to fill out a loan application. That person will probably be your primary point of contact and will assist you to throughout the application for the loan process.
As a part of the application, you'll likely have to provide ID, just like a license or passport, and proof of income, just like a recent pay stub or taxes. But that doesn't mean that things are going to happen on paper. Many traditional lenders offer online applications and permit you to submit your supporting documents digitally.
Once you've filled out the applying, the bank will work a credit inquiry or hard pull of the credit.
FYI: The inquiry will show up on your credit score and may drop your score – but not by a lot and not for very long.
Once you're approved, the lender will typically deposit the funds into your bank account. The bank may require that you have a checking account together to receive the funds, or they might offer you a lower rate of interest if you open an account and use it to create your monthly payments.
Using a web-based lender
When you train with an online lender, everything happens online. You want to the lender's website and do as instructed. If all goes well, you might never make contact with a single human being.
You usually complete a prequalification form first. The form requests basic information much like your name, address and Social Security number. You may also be asked how much you want to borrow and just how much you get.
Based about this information, the internet lender will perform a soft pull of the credit. They'll check your credit rating, but unlike a hard pull, it's not going to get reported to some credit agency.
The prequalification form is like a prescreener. It allows the lending company to do a quick, informal overview of your finances. When the lender has reviewed your information, they'll give you the choice to complete a far more detailed form.
At this time, the lender asks for more information, and you will be offered more specific loan options, including loans, rates of interest and fees.
An online lender may also request documentation, including ID, like a copy of the license, and proof of income, just like a recent pay stub or tax return.
Pro tip: Be sure you know which file format(s) the lending company prefers for submitting documents.
Once you've provided the paperwork, the online lender will review your application and let you know what kind of loan you be eligible for a.
If you're approved, the lender will transfer the funds for your checking or checking account. In some instances, the lending company might even send any part of the money directly to your charge card company or other creditors.
Data Privacy Concerns
When you submit a loan application online, you're sharing personal financial information online. Exactly the type of personal financial information hackers and identity thieves love to capture.
For plenty of us, a sense of security is likely probably the most appealing aspects of working with a bank or credit union. In the end, they have vaults and guards and insurance – so that they must be safe, right?
When you are looking at the protection and security of your data, you're just like safe working with a web-based lender. Most legitimate online lenders use the same security technology brick-and-mortar banks use to keep your information protected from hackers and identity thieves.
But that doesn't mean you should relax and drop your guard. Stay safe by following these common-sense tips:
Check to see if the lending company is legit
Most online lenders are legit. They're the brand new kids on the market when it comes to lending. They're typically backed by investment banks and therefore are regulated.
Scammers are very good at pretending to become legitimate lenders, so you have to get equally as proficient at scoping out red flags, including:
- A lender asking for anything upfront
- A lender not asking for ANY qualifying information about your credit
- A lender calling, writing or asking to meet you at the home
- An overly aggressive or demanding lender
Those are a few signs the \”lender\” you're coping with might not be legit. If you've got questions regarding your lender, we have a professional tip.
Pro tip: Determine if the lender is registered with the Better Business Bureau(R) and check using the Federal Trade Commission to see if they're licensed where you live.
Make sure you're using the right site
Scammers have gotten great at creating fake websites that appear to be a lot like the real ones. Always make sure the URL you're using came from the internet lender to check out HTTPS in the website or perhaps a padlock icon in your browser's address bar. If you do not see either of these, close the tab immediately.
Don't expose your information
Banking from your local coffee shop may be convenient, however it might not be safe. Avoid using public Wi-Fi when you are sharing private information online. Scammers may use their computers to record your information while you type.
Use your (hopefully) password-protected Wi-Fi at home instead. And if you are banking in public, use your mobile data plan. It might not be as fast as Wi-Fi, but it is more secure.
What Would be the Pros and Cons of Applying for an unsecured loan Online?
If you're considering trying to get a personal loan online. Here are some helpful benefits and drawbacks to consider.
What Would be the Benefits and drawbacks of Applying for a Personal Loan in Person?
If you're considering applying for an unsecured loan at your local bank or credit union. Here are a few more helpful benefits and drawbacks to consider.
That said, many banks and credit unions realize that they should be fast to stay competitive. Today, more banks and lending institutions provide the ability to apply online and get help 24/7.
Deciding That is Best for you: A web-based Lender or in Person
Still unsure? Use our helpful side-by-side comparison to think about the differences between online and traditional lenders.
| Online Lenders | In-Person Banks or Credit Unions | |
| Application | Fully online | May offer a mixture of on the internet and in-person options |
| Qualifications | Focused mainly on your credit score and credit history | May consider other factors like your history with them |
| Requirements | Might be more prepared to help borrowers with bad credit | Prefers borrowers with higher credit ratings and stable income |
| Paper or PDF | PDF or any other file formats | Willing to accept paper or digital documentation |
| Offer Other Options | Focused exclusively on a specific kind of loan | Can provide a wider range of loan products |
| Customer Service | May provide online reps, but not one point of contact | Work with a dedicated loan officer during bank hours |
New Technology Means You'll Get the Lending Experience You Want
If you are looking for a personal loan, both on the internet and in-person lenders can help. They work differently, but each can present you with the cash you'll need. It boils down to which option works best for your way of life as well as your financial needs and concerns.
So, are you #TeamConvenience or #TeamCustomerSupport?
