Pros and Cons Of Online Loans You Need To ConsiderApr 05, 2019
South Africans are saying no to traditional bank loans. The number of loans from financial institutions dropped from 21% to 14% in just one year.
One reason for this drop could be the rise of online loans. But are they a better option for the people?
Read on as we outline the pros and cons of online lending.
Pros of Online Loans
Online lending is changing the way people access funds. Here are some of the advantages of online lenders.
The personal loans online approval process is quick. Applications are easy and fast, most can be done in just a few minutes.
The best online lenders will approve you instantly.
Then, if your loan is approved, you could have the funds in your account within a couple of minutes!
If you go to a bank, the approval process takes a couple of days sometimes. And then you may have to wait over a week for the funds.
Closely related to speed is the convenience of online lending. You don’t have to make an appointment and drive to the bank.
You don’t have to sit in a chair flicking through a magazine while you wait your turn to see the bank employee.
You can apply to the best online loans from your computer at home. All your transactions with online lenders happen exclusively online.
You never have to drive to a bank to pick up a cheque, sign a form or complete any paperwork.
Easy to Qualify
Traditional bank loans can be difficult for people to get. Especially if they have a low credit score.
But online lenders are much more flexible. Many of the best online loans are targetting towards people who are typically not approved for bank loans.
Cons of Online Loans
One downside of some online lenders is extra fees. Some lenders will charge you to apply for a loan.
There could also be hidden fees on top of the interest rate of your loan. Make sure you research the online lenders and read the fine print.
Some online loans can be costly. The rates may be higher than the APR that you might get at a bank. Yet, the convenience may be worth it for you.
Also, most online loans don’t offer prepayment savings. Let’s say your loan is due in 3 months. If you pay it in 2 months, you will still owe the same amount of interest and fees.
In most cases, there’s no perk to paying your loan early.
Another con of online loans is that you give the lender access to your bank account. They deposit the funds to your account. But they can also withdrawal payments on your payday.
Make sure you look for safe online loans to prevent serious problems. The last thing you want is a lender repeatedly taking the same payment more than once.
Always research the online lender to protect yourself from fraud.
We hope this guide on the pros and cons of online loans helps you understand if online lenders are the right choice for you.
Remember, not all online lenders are alike.
At Hoopla Loans, we are not a lender. We work as an online broker to help you safely and quickly get access to many lenders in South Africa.
Want better credit? Learn how to use a personal loan to build your credit rating.