With the emergence of online lending companies and services, you can now easily apply for a loan and borrow funds wherever you are and whenever you need them. However, many potential clients are still unaware that current circumstances also increase their risk of dealing with lending companies operating illegally.
As a responsible borrower, it’s imperative to ensure that the online lending company you’re dealing with is legitimate and provides sufficient security for your personal data, among other safeguards.
In this article, we will share a few guidelines to help you decide which lending company online is the best fit financially.
First, let’s define online lending and the potential benefits it can bring you.
What is Online Lending?
Whenever you’re in need of funding, you can look for financial companies that provide loan services online. Some of these lenders also have physical locations or storefronts where they serve clients.
One advantage of using the service of an online lender is that borrowers can apply for loans online at their convenience. Since you don’t have to visit a storefront, you’ll find the application process to be way quicker and more straightforward.
Once your loan is approved, you’ll be set up on a payment schedule that usually coincides with your pay dates. Repayment may consist of a single payment or multiple payments, depending on the type of loan you’ll get.
Potential Benefits of Online Lending Services
Convenient and Efficient Process
Online lenders usually aim for a simpler and quicker application process. The majority of the process is done electronically, while you may be required to upload verification documents (such as a driver’s license) for the lender.
On the other hand, some branch-based lenders allow you to initiate the application online but ask you to visit them in person to complete the process.
Fast Application Process
Instant loans are the trend nowadays. Very few loan applicants have the patience to wait for days before their application gets accepted. Long delays in the loan evaluation and approval procedures can lead to a lender’s business being redirected to a competitor. No business in its right mind would want to lose a client or prospect that way.
Your transactions, payment amounts, and payment dates are easily accessible via an online interface. This information is usually updated regularly, which helps keep the entire lending process transparent.
After-Hours Client Support
Online lenders generally provide customer service during regular business hours to answer inquiries and assist applicants with any concerns about the application process. Some of the best and most established online lending companies provide round-the-clock assistance for their clients.
Quick Tips When Choosing an Online Lending Company
Go for an Online Lending Company with a Simple and Transparent Application Process
The ability to borrow funds online is beneficial since it eliminates the need for you to travel to a storefront and wait in line to talk with an associate.
However, the entire borrowing process shouldn’t just focus on convenience and getting quick loans online. The process itself should also be transparent.
Pertinent information, such as the rates and terms of the loans being offered, should be easily accessible on the lending company’s website. Also, after you initiate the borrowing process, the relevant and important information about the loan being offered should be properly stated in the loan agreement.
Finally, there should be no hidden fees. If any part of your loan or borrowing process is unclear or confusing, it should be easy enough for you to contact a customer support representative for assistance.
Check the Online Lending Company’s Reputation
One of the most significant qualities to look for in a company is its reputation. You wouldn’t want to do business with a lending company that has a poor track record and received bad reviews.
With the influx of online lenders, make sure to look for a company that has proven credibility and an established reputation. You can make use of Google and other social networking sites, such as Facebook and Google My Business, to gain first-hand reviews and customer experience about the specific lending company you’re eyeing.
Refer to the Online Lending Company’s Portfolio
In essence, a company’s portfolio is what it says about itself, including the methods it uses to promote specific products and services. The easiest way to evaluate any online lending company is to visit their website. Always check to see if the company is registered with the proper authorities. See to it that the business license is visible on the website. This ensures that the company is being regulated and monitored closely by the government. Being registered reduces the likelihood of any company abusing customers or engaging in illegal practices.
Evaluate the Costs Involved
The costs involved when borrowing includes the additional amount that you must pay on top of the principle. The government limits the cost of getting a loan, typically in the region of 10% to 30%. Lending companies will charge different interest rates depending on the company size and the loan amount. Take note that the interest rate is usually determined by the length of time the loan should be repaid.
Research on the Level of Customer Service an Online Lending Company Offers
Performing some research on different online lenders should give you an idea of the quality of customer service they provide. On top of that, make sure they adhere to the crucial aspects of good customer service throughout the borrowing process. One of the pillars of a reputable online lending company should be transparent and consistent communication.
Legitimate online lending companies understand that their success is dependent on their reputation and ability to keep their customers’ information secure and private.
These companies take precautions to safeguard their own operations and the business of their customers and potential clients. Obviously, they’re the type of lending companies you’d want to do business with, either online or offline.