Let’s face it. At one point in time, you, a friend or a family member may need to borrow a loan for an emergency situation or other needs that need to be met. Based on the circumstances and your credit history, you may want to shop around for a loan that will fit your preferences.
Thankfully, there is a lot of great information online about different types of loan options and the benefits of each type. In fact, when you begin to shop around in this industry, you may find some of the main reasons why an online loan may be better than a bank loan.
Keeping these and other related things in mind, here are 4 of the most common reasons why an online loan is usually better than a bank loan.
1. The online loan approval is way faster
An online loan can be a lot faster than getting approval for a bank loan. Even though you may meet with a banker in person to apply for a bank loan, there are certain steps that you will need to take first. These steps can easily differ from one banking institution to the next. So, you need to know the process that it entails along with the prospective timing of the approval. For example, some bank approval may only take a few minutes for a decision to be made. On the other hand, there are other banking institutions that may not approve a bank loan until at least 2 to 3 days have passed.
So, unlike the bank loan approval process, online loans can be a lot quicker to receive a decision. For instance, the online loan may not require all of the mandatory qualifications that are involved in a bank’s approval process. This is normally because an online loan may not require all of the eligibility requirements to secure the amount that is needed quickly.
2. You can get an online loan even if you have a bad credit score
When you are applying for a bank loan, you can expect the qualifications for the amount that is needed to be a lot stricter. The credit score that you need may even range from good to excellent. So, if you are expecting to qualify for a bank loan with a poor credit score rating, you may not be able to get the loan at all.
On the flip side, if you are applying for an online loan today, you can also expect the qualifications to be a lot looser. Based on the online lender, they may eliminate the higher credit score ratings to ensure people with a bad credit score can secure the approval that they need. For instance, in some cases, online lender like Little Loans UK may even target people with a bad credit score.
3. It is easier to get approved
As mentioned before, the approval process for a bank loan and online can be vastly different from one to the next. One of the top reasons is that bank loans require quite a bit more information on the applications that you submit. For instance, if the bank loan is a secured loan, the bank loan cannot be approved until the security for the loan has been reviewed for acceptability. Therefore, it may take a little extra time to complete the review process before your application goes through the normal application process.
Unlike the online loan, however, the approval process may only require the review of the person’s social security number, banking institution’s information, and personal account number. Since there are only a few pieces of information that’s been submitted to qualify, it is often a lot easier to get approval through.
4. Once being approved you will get the money faster
The process of getting the actual funds to an individual can also differ greatly. This is especially true for any individual who qualifies for a bank loan. For instance, if the funds are being sent from a banking institution, you may require a check to be sent out to the individual and it will take a little more time than the online lending institution.
To speed up this process, the online lender can help to shorten the time frame. For instance, the online lender may simply transfer a specific amount to your bank account. Therefore, you do not have to wait for a physical check to be sent to you directly.
Photo by Alexander Mils