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Understanding Your Options Regarding Personal Loans

Understanding Your Options Regarding Personal Loans
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Whether your need to consolidate a variety of small, high-interest credit cards, get out from under a payday loan or pay an unplanned emergency expense, the most common solution is a personal loan. But where can you find and apply for a personal loan? And what should you look for in the persona loan? 

Where Can You Find a Personal Loan? 

The traditional personal loan came from friends and family. We don’t recommend this route, since owing money to friends and family puts stress on your personal relationships. Then there’s the fact that your friends and family may not be able to loan you the amount of money you need at the time.

Asking half a dozen people for modest amounts is time-consuming and stressful. It is faster and simpler to apply for a personal loan. And the best option is to find a personal loan online. 

We don’t recommend using crowdfunding sites to raise money in an emergency. You can’t guarantee that your request for charitable donations will be funded, much less in time. Asking for loans from strangers on a crowdsourced lending site is also problematic.

You have to attract attention and hope that enough people will loan you money to give you what you need. If you only get 1500 of a 2000-dollar request funded, you’re left struggling to borrow the remaining 500 dollars in time. 

How Can You Find and Apply for a Personal Loan Online? 

An internet search is simple, but that may not be the best option. The top ad results are going to be for the companies that are paying for that top spot in the search results. They have the money to pay for those ads, but that implies they’re charging a higher interest rate than the competition.

There’s also the possibility that they’re scammers. They want to capture your personal information and account numbers, and someone applying for a loan will provide both. 

This is why the best solution to finding a personal loan online is to use a reputable financial portal that vets the lenders they present to you. Then you have a number of lenders to consider. You can compare their loan terms and their interest rate.

You can filter them based on their lending criteria, such as removing those who won’t consider someone with a credit score as low as yours. Or you could filter the lenders based on their service area so that you don’t waste time filling out an application for someone who doesn’t do business in your state. 

If you do a generic internet search for online lenders, you’re going to have to do this vetting yourself. Read the reviews about the online lender on review sites. Don’t give the testimonials on their website any weight, since anyone could write such ad copy and paste it on their home page.

Instead, read the complaints on third party sites. Do they often withdraw extra funds or make accidental double withdrawals? Do they charge extra or hidden fees? Where loan applicants’ victims of identity theft? 

Not every online lending site for which you see advertising is a scam, but many of them are a rip-off. Read the fine print on their website. What is the annual interest rate or APR they charge? Do they charge a loan administration fee? Note that most reputable lenders will not charge this. Instead, it is a cost factored into the interest rate they charge.

You should never pay a fee to submit your loan application, much less do so via a debit card or gift card. Do they charge late fees? That’s fairly standard, but how high are their fees? You don’t want to be hit with a 150-dollar late fee on a 300 dollar installment. Do they charge a pre-payment fee? That’s not uncommon, but a steep prepayment penalty could prevent you from paying off the loan early or keep you in debt though you thought you paid it off. 

What is the Process of Applying for Online Personal Loans? 

We’re going to assume that you’ve found a reputable online lender. The first thing you need to do is to collect the necessary documentation. For example, it is standard practice to request a scanned copy of your driver’s license. Many websites require a liveness test that compares your image to the scanned picture and thus proves you’re the actual requestor.

Expect to enter your name, address, Social Security Number, and driver’s license number. It is common for lenders to ask about your employment, though it is less common to ask for a scanned copy of your pay stub. Note that the pay stub is mandatory if you were requesting a payday loan. 

Fill out every field on the loan application. If you leave off your state, the website will reject you as not living in their service area. If you refuse to provide a phone number or email, they may reject the application because they don’t have enough contact information for you. After all, they want to know they can reach you if they have questions about your application or need to follow up on late payment. You could even have the loan application rejected because you missed drop-down boxes.

These might reference your credit score, the loan amount, or your birth year. Treat the online loan application like a paper application and fill out everything. And failing to check the “I Agree to your terms and conditions” check box can result in it failing to go through, too.

Connections can cause problems with online applications. For example, a website timeout could prevent things from going through. However, that’s generally obvious. On the other hand, clicking submit repeatedly because you won’t wait for things to process could cause the application to be rejected. After all, repeated requests for money from the same IP address looks like fraud, and if they all go through, that’s more than a reputable lender would be willing to loan you. Submit the application once, then wait for it to process. If you get a time out error, then click to submit one more time. Then wait for the confirmation text or email. Don’t forget to respond as required, unless you want to risk rejection for that very reason.