4 things to know before taking an online loan

We all get to that point where we need someone to bail us out of a difficult situation. Unfortunately your friends and family might not always come through. Lucky for you there are online websites that can offer you a loan and pay later with an interest of course. However, before you rush to them for a quick fix loan, there are somethings you should know. Here are four of those things.

1. What is the interest rate?

Because of the pressure, you are in to get money; you might just go in blindly without knowing the interest at which you will be charged. Most people have fallen victim only to find out when it is too late that the interest rate was almost double what other institutions offer. Before you rush to take an online loan take some time to analyze and understand the rate of interest. You can also compare several lenders before you commit.

2. Repayment schedule

This is important; you need to know when you repay the loan. Most online lenders will offer you flexible loans. Your repayment schedule can be broken in several weeks. Skipping a repayment schedule can lead to defaulting which can affect your creditworthiness ratings. If for whatever circumstance you find yourself in a position you will default talk to the lenders and explain your situation.

3. Default penalty

For a bank loan, you are aware of the consequences in case you default paying your loan. Online loans, on the other hand, operate on a different set of rules. Understand first that the alternative lending companies are self-regulated and do not fall under the FDIC regulations. Each lender will make their own rules which might vary from one customer to the other. Before you take online loans, make sure you understand what recourse the lender will take and what will happen to you if you default.

4. Application process

You also need to know how fast the application process is. Unlike bank loans where the application process can take weeks or even months before the loan is approved; online loans application process on the other hand often takes hours to a few days. So find out how long you will have to wait before your loan is approved. Similarly, seek to find out what is required of you, is your personal information is safe and any other detail that entails you sharing your personal information.

Conclusion

Online loans may offer you reprieve when you are in a fix; personal or business related. However, before you commit seek to know these four things in order to protect yourself from grave consequences. If any for reason the information that you would wish to know is not available from their FAQs page, initiate a chat or even call them if possible. Just don’t take an online loan blindly.

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