How often have you walked into a bank to apply for a loan over the last decade? If your answer is close to Never, then that could be because of the convenience of getting loans online. When time is of the essence during a financial emergency, an online loan can be one of the quickest ways to get funds without even stepping outside your house.

According to Finder's personal loans statistics updated as of March 08, 2021, there has been a rapid growth in online lenders in the past year, with an additional 55.87% of borrowers claiming to use an online lender for a personal loan in 2021 compared to 2020. The study also found that people with poor credit are more inclined to borrow online than from banks.

Despite all the statistics and that online loans can help you get cash fast, the main challenge is to find the right online loan lender. In this blog, we will help you do that. Once you understand what online lending means and its potential benefits, we'll share some smart tips that can help you choose the best online lender or online lending company.

What is Online Lending?

Today, almost everything is available online, and so are loans from banks and other financial institutions. The loans that provide you funds by carrying out the entire borrowing process online are online loans. The term 'online lender' is most often used to describe lenders who offer online loans other than the traditional banks.

The process of borrowing and repaying a loan online from an online lender is called online lending. Online lending was born in the 1980s to speed up the lending process and help the borrowers get cash quickly by applying from their homes. Some online lending companies even claim to approve loans sooner than it would take you to drive to their store location. Despite the rise in popularity of online lending, the offline lending method is still not considered obsolete.

Online Vs. Offline Lending - Which One Is Better?

Here's a quick differentiation between the online and offline lending methods to help you get a clearer picture.

What Are The Pros And Cons Of Online Lending?

Before you check out the steps that can help you select an online lending company, you should be well aware of the benefits and risks of using the online method of lending. Although the lending process may vary from one online lender to another, we've jotted down some of the general pros and cons of online lending:

Pros

• A relatively quick, efficient, and transparent application process
• Considered an excellent option for people with no to low credit scores
• Faster loan approvals, sometimes within minutes of applying for the loan
• Easy loan disbursement and repayments through online platforms and mobile apps.
• Most online lenders allow you to get pre-approved and expedite the lending process

Cons

• Only accessible as long as there is any internet connectivity
• Costly in terms of APR as compared to most of the traditional banks
• Lack of face-to-face interaction when an online lender has no physical locations

How To Choose An Online Lending Company?

Selecting a good online loan company is imperative because you trust and provide your bank details and other essential information to get a loan. In addition, the continuous occurrence of scams and frauds in the financial space makes it even more critical for you to do some initial research on potential online lenders.

When selecting an excellent online lending company, you should look for certain qualities and factors. To make your task simpler, we've developed a handy guide on how to identify a safe and reliable online loan company:

1. Pay Close Attention To Loan Details:

An excellent online loans company's first and foremost quality is to provide clear and detailed information relating to all their loan products on the website. Moreover, online lenders are expected to disclose all the information, especially relating to any hidden fees, that you as a borrower will need to make an informed decision. Doing this will help make the application process simpler and easier for you.

2. Carefully Inspect The Website:

There are a couple of ways by which you can check an online lender's website. One way to do this is through WHOIS. You will have to add the lender's website on the WHOIS portal, and it will give you results relating to who owns the site and how long the site has been live within seconds. You can use this information to know how old the organization is and dozens of other statistics that can help you judge the lender better.

3. Search For A Physical Location:

Although online lending aims to facilitate borrowing and repayment of funds through online services, it's better to choose an online lender with at least one brick-and-mortar store displayed on their website. This can be helpful when you need funds urgently and have no internet connection. For instance, CASH 1 has online stores for residents of Arizona, Idaho, Kansas, Missouri, Nevada, and Utah and 27 physical stores across Arizona and Nevada.

4. Measure Effectiveness Of Customer Service:

One of the essential characteristics of a great online lending company is having a stellar customer service team that can assist prospective borrowers before and after taking an online loan. When you opt for online loans, customer service is the only way to clear your doubts. They should be quick in response, reachable 24-7, and have a strong knowledge of the loan products. You can check the reviews of past customers to get some idea of the level of customer service of a particular online lender.

5. Watch Out For Lead Gatherers:

Lead gatherers are sites that pose as online lenders themselves to gather data of potential borrowers to sell to various lenders on different platforms. You should avoid falling prey to such lead gatherers and only deal with online lending companies to get funds safely. Falling into such lead generators can waste your time, especially when you urgently need cash.

6. Check Third-Party Verification And Reviews:

Some reliable and genuine online lenders provide third-party verification on their websites. You can also check reviews and ratings on other sources like Better Business Bureau to find online lenders that you can trust. However, judging based on the reviews can be wrong since people tend to post a review when they're disappointed and move on when they've been offered good service.

How to Apply for an Online Loan?

Selecting the right online lender is one of the crucial steps in applying for an online loan. Now that you know how to identify a reputable and authentic online loan company let's look at the entire process of obtaining a loan from the moment you sense a need for borrowing funds.

5 Important Steps Involved in Getting an Online Loan

Determine Your Actual Loan Requirement

The first step involves deciding how much funds you need to borrow and why. If your need for money is urgent, you can borrow online.

Research And Select The Right Online Lender

Comparing rates, monthly payment options, and offers of various online lenders can help you pick the best fit for your financial need and budget.

Check Your Creditworthiness And Loan Eligibility

Your credit score may not matter to some online lenders. However, checking your score and finding out whether you qualify for a loan from the selected lender is essential.

Apply Online And Pre-Qualify

Make sure you read and understand the loan agreement thoroughly before applying and submitting the application. Prequalifying for a loan can further help to carry out the loan process smoothly.

Receive Loan Amount And Schedule Repayments

Once your online loan is approved, you may receive your loan on the same day, depending on the lender. You can set up a payment schedule and consider setting up automated payments.

Different Types of Online Loans

There are a number of different loan options available online, so it's important to decide which is best for your situation before applying. These three personal funding options offered by CASH 1 are among the most common.

Personal Loans

Choose from various loans to help you get cash fast with approval in minutes. Available in select states.

Personal Line Of Credit

Have extra funds on standby with our hassle-free line of credit. Available in select states.

Title Loans

Use your clear vehicle title as collateral to borrow up to $50,000. Available in Arizona & Nevada.

In Conclusion

Online lending is a relatively new method compared to traditional banking. Still, it can become the first choice when it comes to borrowing money. Moreover, getting loans during emergencies has become more accessible online, whether for individuals or businesses.

Suppose you are cautious while choosing the right online lending company. In that case, you will gain all the potential benefits and avoid any potential risks of online loans. On the other hand, a legitimate online lender will always protect the interest of their borrowers instead of only focusing on their profits. This is precisely the type of online lending company you would like to work with, especially when money is involved. By being vigilant and following the tips to help you choose a safe online lending company, you might never regret borrowing from an online lender.

How To Select The Right Online Lending Company [INFOGRAPHIC]