Courtesy of Fintechnews.org
There are different situations that may require financial assistance from external sources. When you have a peculiar problem and need money right here and right now, a small short-term loan is exactly what you need. However, there are several ways to obtain such loans. We are talking about numerous online and land-based outlets that offer you various credit options.
While both options may seem quite compelling, there are significant differences that you need to take into consideration when taking a loan. Any credit is an additional burden which will cut a sizeable amount of your income for some time. This means that you need to be cautious and choose your credit provider wisely.
Key Differences Between Online and “Offline” Lenders
Several aspects must be thoroughly analyzed before you can take a good loan. If you need to find a good deal, considering all possible options is a wise choice.
One of the biggest advantages of visiting an offline outlet is that you can see a person who will guide through the process face to face. You can ask all necessary questions right away and receive any additional information if you need it. The vast majority of such stores try to cater to their customers and provide exceptional service.
Online lenders will give you another set of advantages. For one, you don’t need to talk about your financial problem with another person. You can use a live chat or simply read an informative FAQ on the lender’s website.
Brokers and Direct Lenders
While there are massive benefits to taking a loan online, you must be very careful when it comes to borrowing money. Some websites will offer you good deals and try to lure in with big promises, but in reality they are simple brokers trying to work as middle-men in this industry.
Offline stores usually represent the organization that will give you money meaning that you will be able to talk with an actual representative of your direct lender and receive all necessary information without all that wrapping made of ads and promises.
What about Licenses?
Whenever you visit a website, you should check whether a lender is licensed and can operate in your own state. This is something that many people forget when applying for a credit. Some companies have nationwide marketing campaigns, but serve only a limited amount of users. Checking the license is one of the first steps that you should make.
Benefits of Online Short-Term Loans
While there are many positives in doing your financial tasks without leaving your home, other benefits can be even more impactful.
- Spend less time. You won’t need to waste hours on queues in stores and spend time travelling around and waiting.
- Easier approval. Many companies are competing in a very aggressive environment and try to make the whole process of borrowing as comfortable as possible.
- You have information. There are tons of reviews and testimonials in the internet. Use this knowledge to your advantage, compare prices, and make right choices.
Disadvantages of Borrowing Online
Benefits may impress you and force you to start contemplating about taking a credit right now, but you should be aware of cons that are also quite noticeable.
- You will pay more. Most online short-term deals are expensive and will significantly burden you and your family. Think carefully whether you need it.
- Overpaying for fees and interest. Even if you want to close the loan before time, you will still have to pay (in most cases) for fees and interest.
- Some websites are pure scams. Remember that reliable companies do not ask for your financial information. In fact, they will often only ask for the credit card number to transfer the money. However, some scams mimic trustworthy websites and try to steal credentials from their users.
Scams Can Be Avoided
The latter is very dangerous and, sadly, more frequent than you imagine. There are lots of ways for social engineers to try and steal your data. They will create websites that are copies of trusted web portals and bombard you with invitations through various online ads. Knowing how to avoid a scam is a handy skill for anyone.
Here are some signs that could indicate that you are on a fishing website:
- Problems with grammar and layout on the website. A sloppily made web page is your first warning. A reliable company will invest enough in their online infrastructure to not have such issues.
- Advance payments. Lenders do not need you to pay any fees and taxes upfront. Whenever you see an option like that, go away.
- Interest rates are too good. Lenders do not run charities. They want to make money. If a website offers interest rates that are way below the market median, you should be very careful.
- Readiness to give you money. If a website says that they will approve your application within hours, something fishy is definitely happening behind a pretty web page.
If you try to avoid website that can be described with any of the descriptions above, you will jump over pitfalls that scammers meticulously set up all over the internet. You can also use other tricks that will prevent you from being scammed.
Here are some of them:
- Research. Reading articles and reviews is a good start. Another important thing is to carefully examine the domain name. EasyLoan123.net.org is a very strange address that a good company will never use.
- Don’t be afraid to be annoying. Inquire about the full business name of the potential lender and check their licenses. Remember that you can always check the license officially.
- Do not share personal data. Any sensitive information should be exchanged with only trustworthy companies. Make sure that you researched and inspected the website before sending any personal data.
Benefits of “Offline” Short-Term Loans
We did not forget about land-based outlets that also offer quick buck to any American above 18-21 years. However, you need to be careful when taking a credit in an offline mode as well.
Here are some benefits:
- You can inspect their business. A quick glance at the office and you will understand whether you entered a shady shack or a respectable place that can offer high quality financial service.
- Immediate support. You don’t need until a technician or a manager is ready to answer your question. Ask right away and receive all important information immediately.
- Assistance from personnel. You will be able to apply within minutes and quickl fill out all necessary forms.
Disadvantages of Borrowing Online
Borrowing from a company that has a network of outlets is generally a better idea since only established franchises and huge companies can run large scale operations with multiple offices all across the country. However, there are still some problems:
It takes long to get a credit. While you can get a credit with 2-3 clicks on a website, you will actually have to do some work before you can get a credit in-store.
There are several limitations that you will have to deal with. You will get less interesting options if you are not a resident of a specific state.
Choosing the Right Option
It is critical to remember that a short-term goal is something that you can use to your advantage. However, a bad choice will lead you to problems that are hard to anticipate.
Here are some things to consider:
- The true cost of a credit. There are some loans where you will pay up to 400% of the amount you initially borrowed.
- Creditworthiness is yet another important factor to consider. Some companies are less kind to people with debt while others will gladly offer you interesting solutions.
- Also think carefully about turnaround periods. You will want an optimal period that will give you an acceptable balance between the interest rate and timeframe.
- Regulations vary from one state to another. There are 10 states including West Virginia, Vermont, New York, and Maryland where lenders must comply to a special interest cap.
The Main Takeaway
Both options can be acceptable when you are searching for a source of a reasonable credit. You just need to be careful and select your lender wisely.