Online lending has simplified things for borrowers. It offers a fast and convenient way of borrowing money. But the challenge is, when you’re looking for a loan, there are various types available. Therefore, choosing one can be overwhelming.
Consider your circumstances and needs when deciding on a loan to apply for. Find out why you need the money first, then compare the loan amount, interest rate, and loan terms. Bear in mind that all loans are not created equal, so find one that is right for your situation.
That said, here are five loans you can borrow online.
#1. Small Loans
These are personal loans that individuals take to finance a project or in an emergency financial situation. Well, there isn’t a legal definition of what constitutes a small loan. However, the amount isn’t that much. Usually, it’s $3000 or less.
Since you get less money, repaying your loan will be easier. However, the drawback is that there are not many lenders offering small loans, and those who offer them have strict terms. That’s because most lenders see them as having a lower ROI.
Small loans are unsecured, meaning you don’t put any personal item as collateral. But, they tend to have higher interest rates. Even those with bad credit can still qualify for this loan. However, they will likely pay higher interest and/or get less amount than someone who has a good credit score.
#2. Payday Loans
There is no standard definition for this type of loan. Payday loans has no fees and you cover them on your next payday. Most places have a limit on the amount of money you can borrow since payday loans can easily lead one into a debt cycle if they are unable to pay.
Typically, you should repay your payday loan in a single payment during your next payday or when you receive Social Security or Pension income. However, in some instances, the lender may allow you to roll over and charge you fees for that.
Borrowers repay the loan either by writing a postdated check for the full balance, that is, plus the fees, or authorize the lender to deduct money directly from their bank, prepaid card account, or credit union.
Payday loans feature higher interest rates. But they can come in handy if you need to purchase or pay for something and you don’t have the money for it.
#3. Quick Loans
These are loans given for a short period. They feature a quick application and approval process since lenders do not conduct rigorous screening. You can get the money as soon as your application is approved.
They are also unsecured. But since you don’t put collateral and it features a short repayment term, lenders often charge a high-interest rate than other loans. However, they are a great solution if you need funds immediately.
Applying for these loans is quite easy. You only need to find a lender that offers them and fill their application. Lenders often don’t perform a hard credit check. Thus, shortening the approval time. Instead, they conduct a soft check to confirm that you’re capable of paying the loan amount you want to borrow.
Funds can be deposited in your account as soon as within 24 hours. Also, note that the loans don’t feature strict terms and conditions. Therefore, as long as you can repay them, they can be a great financial help.
#4. Short-term Loans
Short-term loans are given for a short period. You apply, get the loan, and repay it within a short time. They can be a lifesaver if you need emergency funds for medical bills, car repairs, etc., without going to the bank for a loan.
These loans don’t require collateral, and you can repay them in weeks, months, or years. Most lenders, however, need you to prove that you are employed and see your income statement. But other than that, the credit requirements are generally lower.
The drawback with these loans is that their interest rate is very high. It can even go up to 400% without including other fees and penalties. But the advantage is that you can apply and get them quickly.
You only need to submit your application online and wait for the company to review and send you their loan terms. If you agree, you can get the money within a short time.
#5. Emergency Loans
Financial experts advise us to save for emergency funds that cater to unexpected costs. However, this isn’t always possible.
Sometimes an emergency can occur when you least expect it. In that case, opting for an emergency loan may be your best solution.
An emergency loan is a short-term loan to help you cover an unexpected expense. It’s usually given for as little as a week or two to people with bad credit. So these two factors mean that the loan features a high-interest rate and fee.
Lenders often require that you show proof of your employment, income, and social security number. Once you fill out the application, the lender can review and approve it within a short time.
Because of the different online loans available, it’s wise that you decide which one you want before applying. Also, set the amount you wish to borrow and ensure that you can afford to pay it back.