Borrowers today have a lot more choice when it comes to credit. In particular, the market for online loans has expanded considerably in recent years with many more options available. From long-term low interest loans to secured loans and short-term payday loans there are many more products available to a much wider range of borrowers. That means that, no matter what you’re looking to borrow money for you’ll be able to find the right loan for you.
Are online loans a good idea?
If you’re considering online loans then you have probably already done some research into the credit available on the high street. One of the reasons that online borrowing has become so popular is that there are so many different options available when you venture into the digital world. Online loans are a good idea for a number of different reasons:
- More choice, including with respect to the term of the loan, how much you want to borrow and who you can borrow from
- Different types of loans available. For example, homeowner loans, guarantor loans and payday loans
- A faster option. Many online loans companies make it a priority to process applications quickly and most are faster than a high street bank. You could receive funds from an online loan within a matter of hours
- Better rates and cheaper deals. Borrowing an online loan can give you access to lending that has a much more favourable rate of interest than you may find on the high street or with a mainstream bank. A large number of online lenders also offer products that are fee free.
Is it safe to apply for a loan online?
Like any online transaction it’s important to be safe when you’re borrowing money online. Verifying the credibility and identity of the lender is essential to ensure that you don’t end up with huge fees to pay or becoming a victim of something like identity fraud. Tips for borrowing safely online include:
- Avoid lenders who ask for up front fees or offer guaranteed approval
- If you’re offered a loan via an unsolicited call or email this could be a scam
- Look for industry accreditation e.g. a company that is authorised and regulated by the Financial Conduct Authority
- Make sure any website you’re typing sensitive information into is secure – look for the padlock in the address bar
What is the best online loan?
There are many different types of online loans to choose from and the best one will depend on your individual circumstances. Some of the options include:
- Online guarantor loans. This type of online loan is ideal for borrowers who don’t have perfect credit. Your application is supported by a guarantor who provides additional peace of mind for the lender that the loan will be repaid. If you want to apply for online guarantor loans your guarantor will need to be at least 18 years old with good credit and may also need to be a homeowner.
- Online payday loans. For short-term borrowing needs, online payday loans are ideal. Borrow a smaller amount of money over a month and then repay the credit when you next get paid.
- Online secured loans. If you’re applying for a secured loan then you will need an asset, such as a property. Homeowner loans are a good example of online secured loans – when you make an application, the loan is secured against your home, which can help to overcome issues such as a poor credit score or low income.
- Online unsecured loans. When you make an application for an unsecured loan online you don’t need to have any assets – or a guarantor – to support your application. Instead, lenders will make a decision about whether to lend to you based on factors such as your income and credit score.
What is the best online loan company?
There is no simple answer to this question, as it will be different for every borrower. Shop around to see which online loan companies offer the type of borrowing you’re looking for and where you’re going to find the best and cheapest rates.
How to apply for a loan online
- Work out how much you want to borrow
- Check your credit score – if it’s low then you may want to delay your application and take some steps to improve your credit score, such as correcting any mistakes or cutting back to pay off some existing debts
- Carry out an affordability test for yourself – is it easy for you to make the repayments each month and still cover all your other outgoings?
- Review the different types of loan available and find the one that best suits your circumstances
- Identify a lender who offers the loan that you want at the rate that you’re looking to borrow
Borrowing online is a great way to get access to the cash that you need, whether that’s for home improvements or an emergency. There are so many different options available that you’ll always be able to find the right online loan for you.