Online loans are gradually replacing the old system of credit. Technology is constantly advancing, hitting every aspect of existence in a world constantly evolving. The financial sector is not left out of this advancement. In fact, the financial services sector has witnessed the most technological evolution in recent years.
Gradually steering towards completely abolishing the old ways of manually carrying out financial services, we are looking at a more modern surge.
What are Online Loans?
Basically, an online loan is a loan from a financial service provider who operates online. Though the application process varies depending on the lender, they are relatively similar in comparison. Online loans lets you complete the entire borrowing process, without ever setting foot inside a bank branch. Cool, right?
One of the most convenient ways to borrow money is to apply for an online loan. Often, they offer lower interest rates or have less stringent requirements than traditional lenders. All online lenders have different minimum eligibility requirements and credit requirements, just like traditional lenders.
Additionally, you will have to upload a copy of your government-issued ID and other documents proving your income. If you scale through the application process successfully, you’ll have the money deposited in the account provided during the application.
Types of online loans
There are four types of online loans. Examples of these include:
- Payday loans
- Title loans
- P2P loans
- Personal installment loans
1. Payday loans
Payday loans are typically short-term loans with very high interest rates. The typical repayment period for a payday loan is typically two weeks. Though terms might vary depending on the borrower, payday loans are designated to be repaid in a single lump sum.
If you’re unable to pay back the loan, most borrowers give you an option to roll over the loan amount.
2. Title loans
Title loans are loans that require an asset as collateral. These are short-term loans, and the lender does not consider the applicant’s credit rating. Unlike payday loans, title loans are secured by the title to your car, truck, or motorcycle.
In a situation where the benefactor defaults, the borrower can seize the property and sell it to recoup the loan amount.
3. Peer-to-Peer loans
This is a type of an online loan that opens you to get a loan from another individual rather than a financial provider. Popularly known as P2P loans, they’re funded by individual investors. A great percentage of P2P loans are arranged by online sites that pair borrowers with private lenders.
Just like every other form of a loan, peer-to-peer loans come with interest and rates.
4. Personal installment loans
This is considered the best form of online loans. Unlike other forms of online loans, installment loans are designed to be paid back in a series of regular payments. Be careful though when applying for this type of loan online as a lot of them have very high-interest rates.
The online loan has a lot of advantage over traditional loans. Some of these advantages include;
When it comes to borrowing money, convenience is desirable. I mean, it’s bad enough that you have a financial emergency, right?. With online loans, instead of visiting physical branches, you can access loans from your comfort. Some of these loans even come with better rates and terms.
2. Low-interest rates
More often than not, you would be offered lower fees and relatively lower interest rates on online fees. However, it is important to note that your rates would be impacted solely by your creditworthiness.
3. Instant Rate Quotes
Many online financial providers offer instant pre-approval. After considering some basic information, you would get to know if you are pre-qualified for a loan. By this, come to know about the loan terms and rates without filling out the entire application.
4. Quick Processing Time
Unlike the traditional type of loans, online loans could process your money a lot more quickly. Online loans could be the best choice for someone who is in urgent and dire need of money. Once your application is approved, the transfer is made within the next 24 to 48 hours by most online lenders.
As much as online loans seem to be the best option for emergency lenders, it has its perks too. It is good to understand some of the disadvantages too, so you can stay wary of them. Some of these disadvantages include.
Processing your loan data may be as dangerous as your privacy may be compromised during the process. Knowing this, try as much as possible to borrow from a very reliable online source.
2. Technical Issues
Some online borrowing processes may involve technical challenges. These challenges may involve website hacking, loss of data, and many more. Be sure to lend from financial providers with a reputable online system.
How fast can I get an online loan?
When a financial emergency arises, you might not have enough time to compare lenders and wait for the funds to arrive. One of the major advantages online loans has offered traditional loans is the easy and swift application and funding process.
A few top-notch online lenders offer same-day funding once you’re approved. But generally, it might take up to two to five business days for the amount to be released. The time and days solely depend on the financial provider you decide to go with. Some lenders may also take several days to review and approve your application.
Can I get an online loan with bad credit?
While some financial service providers focus on lending to people who have bad credit or are new to credit. Some pay a lot of attention to your credit score and put strict bans on lending to bad or low credit applicants.
Most times, the lower your credit score and income, the more difficult it may be to qualify for a loan. And if you qualify, you may receive a high-interest rate. So unless you need the money so urgently, you may want to focus on improving your credit before taking out a loan.
You can also look for an alternative and a less formal way to get the money you need. Here’s a tip, a loan from a friend or family member or crowdfunding could be a great option. Also, if you can ask a friend to cosign for you if you’re sure they are creditworthy.
Top 5 Loans with instant approval
When financial emergencies occur, online loans can be the most convenient option to get fast cash. But not all online lenders are reputable. Below is an insight on a few efficient credit providers in South Africa.
- Getbucks loans
Getbucks is one of the best online platforms for providing credit services. Using smart technology, you can access their loan service from anywhere, anytime that suits you. What makes them stand out from other loan platforms is the fact that their application is online and only takes a couple of minutes to complete.
- Izwe loans
Izwe loan provides one of the most flexible and accessible financial services aimed at enriching the lives of their customers. After conducting enough credit checks and assessment on your loan application, the exact amount released. This usually happens within 24hrs of approval. Easy and swift access is one of the most peculiar importance of Izwe loans.
- Dail-direct loans
Dialdirect is a South African financial services provider and insurer. They’re reputation for providing quick loans presides them. Operating with a swift application and loan payment system, Dialdirect has been able to soar to the top of the list of financial providers who provide instant loans.
- Dube cash
Dube cash offers instant access to credit at your convenience. Application approval occurs almost immediately or within 60 minutes. The short-term loan amount is also sent into your account almost immediately after approval. Pretty sweet, right? Well, it is important to note that repayment amount is usually deducted when you receive your next salary.
- Hoopla Loans
Hoopla loans is an online brokerage company that offers short term loans and other forms of credit service to its borrowers. As soon as you complete Hoopla’s online application form, hoopla sends it out to credible and reputable lenders. Lenders will consider your application and treat it as top priority knowing it is coming from Hoopla loan.
Irrespective of the fact that you might have a bad credit score, Hoopla loan can solve your financial challenges..
When financial emergencies occur, online loans can be the most convenient option to get fast cash. But not all online lenders are reputable. Be sure to do your homework to find a loan with a good APR and borrower-friendly payment terms. Carefully study and go through online customer reviews to get a clearer picture of the financial service provider.