Whether you need to pay an unexpected bill quickly or you have another emergency you need funds for, fast loans online can seem to be a godsend. However, are they legit? Here’s what you should know before you apply for a loan online.
The Online Lender
Typically, private individuals or businesses offer online loans through a third-party website facilitator. There are online financial lending companies and P2P lending websites that will offer you quick access to money. The traditional bank loan process is laborious and can take weeks to formalize. Worse, I don’t need to tell you, but many people are denied loans with traditional banks. You could end up waiting weeks to find out you don’t qualify.
Many online lenders specialize in offering personal loans and business loans. The application process is online-based and automated. Usually, you’ll need to be gainfully employed, have lived at your current residence for a year, and have a bank account. It helps if you have good credit as well. You can often get approval for an online loan within minutes or days.
Most borrowers qualify for hundreds or thousands of dollars for a loan. To qualify for an online business loan, you may need to provide additional information or documents.
Paying Off Fast Loans: It’s Important to Have a Plan
Upon approval for fast loans, you’ll receive a contract by email that stipulates the repayment terms. The interest can range from 4% to 36%. If you have bad credit, some online lenders can charge as much as 1000% in interest. You could incur serious fees for missed or partial repayments. Also, you are often authorizing an online lender the right to automatically withdraw from your bank account for repayment on their own preferred schedule.
You need to understand the repayment schedule and have funds available on withdrawal dates. Otherwise, you will incur bank overdraft fees. It’s important also to make sure you have some steady income to cover your loan repayment dates. Or, you’re just repaying an online loan and incurring more debt.
Make Sure You Have No Other Option
You don’t have to be poor to be desperate. Sometimes, you might be in a hurry to pay a bill or come up with funds quickly. Desperate people who make desperate, impulsive choices usually just end up more desperate than before. If you can, it may be better for you to wait and save more money, or you could end up further in debt because of online fees and interest. Instead, try to borrow money from a relative or leverage assets, collateral, or home equity for a loan.
Many online loans are legitimate. However, they can be more trouble than they are worth if you don’t understand what you are getting yourself into.
Read More:
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.
