Both businesses and individuals struggle with loans. Small businesses especially have it bad when it comes to applying for a loan. Banks and lending agencies might deny their application and they’d have to find other alternatives to start or keep themselves in business. Luckily, the Internet has made many services more available and lending is one of them. You can find plenty of online lending platforms like Asteria Lending, SoFi, Upstart, and others. Recently they’ve been getting more attention since they specialize in unsecured loans which are perfect for individuals and small businesses, but is borrowing money online better than doing it the traditional way?
The first difference between offline and online loans is the time it takes to get your application approved. In both cases, you need to have your documentation prepared beforehand. When it comes to agencies and banks, these documents will be thoroughly checked before your application’s approved. This will take a lot of time. When it comes to lending sites your application will be reviewed and approved or denied in minutes so you’ll know where you stand. The thing about offline and online lenders is that they need to see your credit score before approving the application.
A good credit score will give you a better reception with banks and private agencies when it comes to taking a loan. This shows them that you handle your finances well and you’ll have no problem in returning the money you borrowed. Having a bad credit score has many negative effects. One of them is that banks and agencies will deny your application or accept it and give you unfavorable terms, so you’ll be in a worse situation than before. The thing with online lenders is that your bad credit score has a smaller chance of influencing the lender to deny your application for a loan. You’ll receive unfavorable terms, but they’ll be slightly better than those at banks and agencies.
Suppose you had your application approved regardless of your credit score. Now all you need to do is wait for the money to be transferred to your account. Banks and agencies do this in a couple of days whereas online lenders do it within 24 hours. Moreover, they are available at any time so if you’re in a tight spot and you need money fast then you only need to log into a website and you’re set.
The thing with online loans is that they’ll give you a high-interest rate on any loan. This is probably because they give plenty of loans to clients and they need to stay in business somehow. Another thing that is a potential problem is the fact that these services are online. Scammers can easily set up a fake website and try to steal your money. If you’re cautious you can avoid these scams. All in all, online lenders specialize in unsecured loans which is why they’re ideal for small businesses and individuals, so if bigger loans are needed then people will have to turn to banks and private lending agencies.