Typically, when answering the question what are online loans, we find that they are short term lending solutions otherwise known as payday loans or quick loans. Online loans differ in amount, repayment terms and application procedure, to traditional lending.
Online loans are fast and convenient. The application process is usually simple and a loan could be approved, and the funds sent to a bank account within a day. They are also a private way of getting lending, which suits many consumers who wish to keep their finances to themselves.
You can normally borrow between £80 and £2000 online. Repayment terms are short, hence the term payday loans. Usually, you will repay an online loan on your next payday or shortly after. Online loans are used in emergency cash flow situations, rather than for more material goods or non-essential purchases.
Online, short-term, or payday loans have higher interest rates than traditional loans via banks or high street financial institutions.
An online loan can be found and applied for on the internet. The application and approval process is mostly online, but there is usually a phone call or SMS authorisation at the end. Many loan providers do not have a physical store or high street presence. Their loans and services are only available online.
What are online loans? A brief history of online loans in the UK
Payday loans grew in popularity in the UK after the last recession, growing again in popularity after 2004. They became available online with the growth of digital commerce and the internet. Today most payday loans or quick loans are obtained through a website.
After much scrutiny for high-interest rates and charges payday lenders became regulated by the FCA in April 2014. The FCA took over consumer credit regulation and scrutinised lenders to make sure they met certain conditions. The changes made taking out an online or payday loan safer for borrowers.
Though borrowers should always remember when trying to answer the question, what are online loans or short-term loans, that they are emergency borrowing options with high rates of interest. Consumers with debt problems or long-term financial difficulty should always take professional financial advice.
What are online loans? How are online loans different to traditional lending?
Traditional loans are usually for larger amounts and have a longer and more stringent application processes. Repayment is normally over a period of years instead of months. Traditional loans are offered by banks, building societies and other lenders. Traditional loans are harder to obtain if you have a poor credit history, but they do have lower interest rates when compared to online loans.
Online loans are just that. They can be found, applied for, and obtained online. Though there can be a phone call or message required to confirm details, and agreement to terms at the end. There are many more online loan companies than there are traditional lenders. However, any lender in the UK has the be approved by the Financial Conduct Authority (FCA). Online loan applications and approvals can be very fast. For this reason, online loans often suit sudden emergency situations such as the need for a car or home repairs, emergency medical or dental bills, and other unexpected but immediate situations.
Online loans can be found by searching the internet for an online loan company or finding a short term or quick loan broker.
You will still need to complete an application for an online loan. But, the application form is usually shorter than a traditional loan application. An online lender will still conduct credit and affordability checks. It can be true that a lender with limited financial history or a poor credit rating can be refused for traditional lending but accepted for an online or payday loan.
What are online loans? Can online loans be obtained completely via the internet?
The application process for an online loan is far simpler than applying for a more traditional loan. Once a loan broker or loan provider is identified you can complete the application electronically. Once you complete the form online and submit it to the lender or broker your response will come back via email and you can proceed with your application. On the whole, you will communicate with your online loan company via the internet or email. At the end of the process, when it comes to checking your credentials and agreeing to the terms of the loan, a phone call or text message may be required.
What are online loans? What is the best way to find an online loan?
There are many online or quick loan providers on the internet. Though any online loan company should be authorised and regulated by the FCA there are many less reputable loan providers. Care should be taken when searching for a loan online.
It’s worth remembering that the loan providers which appear at the top of your search results might not be the best ones out there. You should always assess a loan provider thoroughly. Make sure they are registered with the Financial Conduct Authority (FCA) to start with. Then check their website thoroughly and decide if you think they are credible. You should also look for independent online reviews from customers who have used their services.
Loan companies spend many thousands advertising and promoting their loan products. It’s one of the most competitive industries.
Finally, when answering what are online loans, you can also consider using an online loan broker. The CashLady website is one such example. There are many loan brokers, but less than there are loan companies. A good loan broker will have a panel of chosen and reputable lenders. Using a loan broker means you submit one application form which is that sent to loan companies who may consider lending to you. When you receive a loan offer in principle from a lender, you then continue to deal with that lender. If borrower and lender are happy and all criteria is met you can go on to finalise your loan.