In today’s economy, there are really times when you might have to take out a loan. Health emergencies, in particular, are one of the most common reasons why people are forced to borrow money from lenders, even when they don’t want to incur debt. Fortunately, a lot of companies are popping up to provide this type of service to the public. This creates competition in the industry, which actually benefits consumers since these lenders would strive to offer the best deals to potential clients.
Most companies have also developed mobile apps to make it more accessible for their customers to apply for a loan. With so many platforms to choose from, you may be having a hard time finding the best app for your financial needs.
Borrowing from the right lender depends largely on your needs and preferences. There isn’t one company that’s perfect for all scenarios. With this in mind, you have to consider the different essential factors when applying for an online loan, such as:
Source: Forbes
Contents
1. Interest Rates
An interest rate is usually the interest on a debt divided by the period during which the loan or deposit is being made. The total interest in an outstanding amount depends on the term, interest rate, and the duration of time during which the loan or deposit is being made. Interest rates vary from one lender to another, and can vary drastically from one financial institution to another.
The interest rates vary from one lender to another because different lenders have different interest rates. For example, an interest rate on a home mortgage loan is lower when compared with other loans that are offered. This is because the home mortgage loan has a fixed rate, and the lender can easily determine the best rate for the loan.
One lending company in Canada, however, is determined to provide a uniform rate to their customers. According to iCASH, you get to pay the same interest fee whether you decide to repay the amount you borrowed at one time or through installments. This can reduce the additional cost of your loan and give you enough allowance to pay off the debt promptly.
There are several ways that can help you determine potential interest rates. The most common ways that lenders use are credit scores, financial history, credit score history, FICO score, credit history, credit rating, and personal financial profile, among others.
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2. Eligibility Requirements
One of the benefits of online loans is that you can borrow money even with a bad credit rating. Nonetheless, you still have to determine the eligibility requirements of a particular company since they use your credit score to assess your financial trustworthiness.
The first thing you need to know about your credit rating before you begin shopping is that it’s based on three factors. These are your total debt, how much you owe, and how much available credit you have. The higher your debt is, the lower your credit rating, so if you owe more than CAD$10,000 on a credit card, you’ll have a poor credit rating. The best way to get started in fixing your credit rating is to start shopping for finance.
Another factor that influences your credit score is the length of time you’ve had credit. If you’ve just recently applied for a credit card, then, you’ll probably have a low score because you have no credit history.
It’s not always a good thing to have zero debt. In today’s modern world, you must borrow a little money. The most important thing you should remember is to repay your debts promptly since this can increase your credit score and open up better rates for you when you want to apply for another loan.
Source: fortune.com
3. Process
Most companies that have apps developed have made their application process more convenient and accessible for potential clients. Nowadays, anyone can apply for a loan at the comfort of their own home. You just need to submit the necessary information and wait for the lender’s approval.
The lender will ask you to list down your employment information in the online application form. You may not even realize that you’re entering employment information into your application, but it’s critical. Some lenders will ask for it, and others may offer you some sort of incentive if you’ve it done correctly. Be careful when filling out this part of the form.
The next step in the application process is that the lender will review your application. They’ll verify your eligibility and check for any potential problems that you may have overlooked. If they find anything that you may have missed, they’ll contact you to discuss it.
Once the lender has reviewed your application and found everything they need, the final step in the process is approval and disbursement of funds. You also have to check how the company will send the money. Typically, for online loans, you just need a bank account, and the lender will transfer the amount to your account.
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4. Payment Flexibility
You should also make sure that the online lender is willing to work with you when it comes to flexibility. Many lenders don’t give out a lot of flexibility when it comes to their repayment terms. This may be because they’re very busy, or they have other clients that they need to keep on top of, so they don’t have as much of a time frame to work with.
However, if you do find a lender that offers flexibility in terms of your repayment schedule, then, this is an area that you should definitely look into. You should also ask for quotes from the lender since this will give you an idea of what the rate may be for a particular amount of money over a certain period of time.
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5. Communication
Open communication between you and your lender is important if you want to get a good deal on your online loan. You should work with a company that’s transparent about its requirements, processes, and rates. You must also check their customer service since you want to ensure that you can expect a prompt response when you contact them for an inquiry on your debt, especially if it’s about payments or consolidation.
When you’re in communication with the lender, you’ll be able to find out what other options they have for you. You’ll be able to find out how much time it takes to get your loan modified. You’ll also find out what types of things you should make sure to prepare for the application process. This way, you can make sure that you don’t forget any crucial document that might delay the loan approval.
Communication is an essential factor in any business, that’s why an in-app chat box is a valuable feature for online loan apps.
6. Experience And Credibility
Applying for an online loan can be tricky. A lot of people have been deceived into borrowing money from companies without being aware of the hidden charges and other unfair clauses in the contract.
Fortunately, with a bit of research, you can make sure that you don’t fall into that trap. The Better Business Bureau has a website where you can go to see all of the complaints that have been filed against certain companies in the past. These complaints have been filed by consumers that have had bad experiences with the company that you may be considering borrowing money from. This information is important if you want to avoid any bad experience from getting an online loan.
Another way that you can use the site to determine whether or not the company you’re considering borrowing money from is legitimate is to check to see how long the company has been around. If they’ve been in operation for seven years now, then, you should probably reconsider borrowing the money. The fact that the company has been around for such a long time shows that there have been no major issues that have occurred.
Your prospective company must also display their license on their website. If they don’t have one, you can ask them to show it to you. Of course, you shouldn’t stop there. You can verify their claims by searching for the lender’s name on official government sites.
Source: entrepreneur
Conclusion
When you’re looking to get an online loan, there are a few things that you need to be aware of. You need to make sure that you know exactly what your options are and, then, you need to research to make sure that you’re going to be able to obtain the loan that you need. There are a lot of sites that offer online loans, and it should be in your best interest to be careful when selecting the best one for your needs.
Make sure that you do your homework in order to obtain the loan that you need. You need to be careful with the type of collateral that you provide for the loan and make sure that the terms that you’ve agreed upon are in line with your budget.
