Advantages and disadvantages of online loan application

Obtaining a loan from the bank or other institutions can take a while before you get approved. If you need quick cash, then you can consider getting a loan application online. You no longer have to wait a week or a month to get approved for the loan you need.

It may seem like an online loan is a great way to get money fast. However, along with the many advantages, it also has its disadvantages. So what are the advantages and disadvantages of an online loan?

Advantage

Let’s first look at the benefits that you can enjoy by obtaining this type of loan.

1. Easy approval: Compared to other types of loans, it is much easier to get approved. Online lenders often have low criteria that you can easily meet to get approved. This may include having a stable source of income, a bank account, and being of legal age.

Even if you have bad credit, there are online lenders who offer online loan services to suit your needs. If you apply for a loan from the bank with a negative credit rating, your application will most likely end up being rejected.

2. Less hassle: the most exhausting part of applying for a loan from banks and other institutions is the paper work that you have to send and fax. You will need to submit the correct credentials to get the loan approved. However, when you apply for a loan online, you don’t have to go through the same backbreaking tasks. You just need to fill out an online form and that’s it.

You no longer have to queue or go personally to the bank or other institutions to apply for the loan. This saves you time and energy, as you can do it comfortably in your own home with your computer.

Disadvantages

Although there are many advantages that can make an online loan application very attractive, it also has its disadvantages.

1. High fees and interest rates – Professionals would advise you not to get this loan, unless the need is urgent. Online loans have higher interest rates and fees compared to regular loans.

Apart from the high interest rates and fees you have to pay when applying for the service online. You will also have to pay a fee if you are late in payment. Most of the late payment fees charged by online lenders are quite high and can be as much as double or triple the amount you have borrowed.

2. Short repayment course: Normal loans from banks and other institutions can provide you with a repayment plan that splits your debt repayment over a long period of time. Repayment can be made within a year or two when obtaining a normal loan. However, an online loan requires you to pay off your debt in a shorter period of time. it can be in two weeks or a couple of months.

3. Vague Terms and Conditions Statement: In some loan services, there may be certain terms and conditions that put you at high risk. This is often intentionally hidden or unclear as they don’t want you to know.

Although useful, there are things to keep in mind before getting an online loan application. You should always weigh the pros and cons before deciding on something.