Online loans can be a lifesaver when they are used properly and responsibly. An online loan is a short-term cash advance that is based on the borrower’s current paycheck. Understanding how to responsibly borrow from an online lender is the key to using this type of borrowing technique. Read on for the top four reasons why online loans can be a great borrowing option.
1. Credit Problems are Not an Issue
An online lender typically does not check into their borrower’s credit history. This is because these types of loans are considered “unsecured”, meaning there is no collateral needed in order to get the loan. The lender provides the loan in good faith to the borrower at a higher interest rate than a traditional loan. However, paying the loan off quickly will ensure that the borrower does not end up paying an additional fee. For those with bad credit, installment online loan companies are the easiest way to secure a loan.
2. Smaller, Personalized Loan Amounts
The amount of the loan given will depend on a few factors. The company will want to know how much the borrower makes per paycheck and the dates they are paid. The loan amount will depend on the ability of the borrower to repay the loan when they get paid again. The loan amount will never exceed the amount of their pay so that the borrower will be able to repay the amount in full when the time comes. Many state laws have capped the amount that online lenders are able to provide, although there are still some companies that lend up to $1,000 and more at a time.
3. Simple Application and Requirement Process
As stated above, the borrower will have to show that they receive a steady paycheck, whether as a direct deposit or as a check. Some online lenders will also allow their borrowers to use another source of income as security for the loan, such as disability benefits, military pensions, social security payments, or work pensions. The borrower will also need to show that they have an open checking account that is in good standing, although some lenders will also accept a savings account. The borrower may also have to show current identification in order to receive a loan. With online lenders, this information can be provided in the form of faxes and/or emails, or by uploading documents online.
4. Easy Repayment Options
The online lender will set up the loan so that the money due is taken out when the borrower receives their next paycheck. The whole amount of the loan, plus applicable fees, will be taken out at one time. If the borrower cannot repay the loan at that time, they may request a “rollover”, or extension. This allows them to push ahead the due date of the loan by only paying the finance fees associated with the first loan.