The advantages of online loans can be easily overlooked. We expect speed and accessibility in every area of our lives. We have no time for waiting around. Also we are on tight schedules, with lots to fit into each day.
We do our shopping online, invest our money online and book our appointments online.
Applying for a loan is no different.
In 2012-2013, 83% of UK payday loan customers had taken out a payday loan online. 29% had been to a high street store for a loan. There was some overlap, with people that had used both methods for loan applications.
The advantages of online loans have meant that more and more people are turning to their web browsers instead of physical stores.
Here are 10 of those advantages:
Advantages of online loans: convenience
You do not need to leave the house to apply for your loan.
This means that you can apply when you have a spare 5 minutes. You could be waiting for your favourite TV show to start, waiting for your dinner to cook or relaxing in your garden on a sunny day.
As long as you have your budget to hand, you should find that the application forms are easy to fill in.
You do not need a lot of time to make your application. Although it is important to first take some time to consider if you really need the loan.
Advantages of online loans: privacy
You do not need to worry about friends or family seeing you applying for your payday loan.
Most people want to keep their financial matters private. If this is the case for you, then it may help to apply in the privacy of your own home.
Nobody will see you walking into a physical shop for a loan, or waiting for a meeting at the bank.
You can apply on your own, with nobody else involved. Also, you are the only one that needs to know if that is how you prefer it.
Advantages of online loans: 24/7 applications
You can apply online 24/7.
You can also send an application on any day of the year, even on a Bank Holiday.
If you are looking for high street loans then you are restricted to applying within the store’s opening hours. Websites do not have closing times.
Be aware that applications may not always be processed immediately. Some lenders only process applications during office hours. As such your application form can be sent at any time, but might not be reviewed straight away.
Before applying for a loan, check the lender’s processing times. These will be listed on the website.
If you need money urgently, this may affect which loans you want to apply for.
Advantages of online loans: extra security
Applying online provides security. You can search the Financial Services Register, to ensure that your application is being sent to an approved lender or broker.
Unfortunately, many doorstep lenders turn out to be loan sharks. People also end up struggling with loan sharks when they borrow money from a friend or a friend.
Loan sharks often prey on the vulnerable and desperate. They get attention through word of mouth.
When you apply for a loan online, your data is stored securely.
Advantages of online loans: comparison options
Applying in a physical location, such as a bank or a loan shop, usually, means that you are asking for money from just one lender.
When you apply for a loan online, you have a wider range of lenders and products to choose from.
You can use payday loan comparison sites. This provides an opportunity to compare loan prices and interest rates, along with terms and features of the agreement.
You can also compare loan types. You consider traditional payday loans alongside guarantor loans, revolving credit and medium term borrowing. Also, Peer to peer loans are a further option.
Advantages of online loans: latest technologies
By applying online, you can take advantage of the latest technological developments.
For example, did you know that some lenders will link to your online banking?
Linking to your bank account
Bank account linking provides extra peace of mind. Lenders will not attempt to collect repayments if you do not have the money in your bank account.
Linking your loan to your bank account can help you avoid certain fees. These include fees and charges associated with failed claims for payment or unauthorised overdrafts.
These technologies are secure. Therefore lenders will only be provided with read-only access, to check your statements without making changes.
Personalised lending decisions
Complex computer algorithms can make decisions based on many details about you.
This means that a lending decision is more likely to be personalised.
If your application is approved, it will have passed the affordability assessments. If it is declined, it will be for good reason.
When you apply for a loan in person, the decision is usually made based on figures and numbers. If you are applying for a bank loan, your previous dealings with that bank will probably play a part.
When you apply offline, your application form and credit score will be used for the final decision.
Online, a wider range of factors can be taken into account. Lenders can see the bigger picture. These technologies are advancing all the time. As a result, an increasing number of data points can build a more accurate picture of your risk level.
Advantages of online loans: on the go
When you apply for a loan online, you can apply wherever you are.
Online applications can be made on the go. You can apply for money on the train on the way to work, or during half time at a football stadium.
There are no limits, as long as you have an internet connection.
Most lenders now have responsive websites, designed to work well on smartphones from any manufacturer. Some lenders have their own Android or Apple mobile applications, to be as accessible as possible.
Advantages of online loans: speed
When you apply for a loan in person, you may need to book an appointment. You could be waiting in a queue. You may have to travel for a while, to reach the lender’s physical premises.
Online, applications can be much faster. Online loans are as close to instant cash as it is possible to get. Smooth, straight-forward applications can lead to money in your account within an hour.
Lenders cannot provide instant cash. However, most can make a lending decision within 30-60 minutes. As a result from that point, a money transfer can take as little as 10 minutes.
Advantages of online loans: unsecured debt
Online loans are typically unsecured debt. You do not need to trade in your beloved belongings.
High street lenders are often pawnbrokers, requiring security in the form of a valuable item. Other options include logbook loans, where you use your car to back the loan.
With unsecured loans, like online payday loans, your possessions are not usually at risk.
Advantages of online loans: easy to keep track
It is easy to keep track of your online borrowing.
Lenders usually provide a personal account, so that borrowers can check their details. You can log in to see how much debt you have outstanding and access a list of your payment dates.
You may also receive email and SMS reminders so that you never miss an important repayment deadline.
Advantages of online loans: accessible information
If you apply for a loan in person, you will need to speak to someone just to find out if you are eligible.
You may also need to visit or call a physical store or bank branch, just to check what you need to bring with you.
One of the advantages of online loans is that the application process is crystal clear. Strict regulations, by the Financial Conduct Authority, ensure that the details are easy to find.
You will quickly see whether you meet a lender’s minimum requirements.
To apply for a loan, you must be at least 18 years old. You will also need UK residence and a UK bank account. Any further requirements are set by specific lenders, so it is helpful to be able to easily see if you fit a lender’s criteria.
Many lenders will need you to be employed, with a regular income.
Few people enjoy feeling rushed into a financial decision, whilst a bank manager is reading through pages of terms and conditions. With an online loan, this information is instantly accessible.
Read through the details at your convenience. Though online loans usually provide the quickest way to borrow money, it is reassuring to know that you can take all the time that you need.