With the impact of the COVID-19 pandemic, many are searching for online alternatives to services they previously got from brick-and-mortar locations. If you’re in need of a personal loan, for example, you may be considering an online lender for the first time. If you’re in that situation and are unsure of what the experience will be like, we’re here to shed some light on the process.
Before deciding where to apply for a personal loan, it’s beneficial to understand what to expect from working with an online lender compared to a lender that is part of a traditional full-service financial institution. To help you make an informed decision, we’ve compiled the most common and distinct differences between using an in-person bank or credit union versus an online-only provider for a personal loan.
Convenience Factor
If you’re someone who values the convenience of things like online shopping with next-day delivery, using an online lender is probably going to appeal to you.
One of the most valuable benefits of online lenders is the convenience factor. Not only can you apply for a loan at any time of day (or night), but you’re able to complete the entire application process from the comfort of your own home.
The opposite of this is true when applying through a bank. The majority of banks (even those that offer online services) will likely still require an in-person visit to their local branch to complete the loan funding process. This usually involves meeting one-on-one with a loan officer and completing the final application paperwork right there in the office. During a pandemic, the added risk of exposure may not be one you are willing to take.
Rate Comparison
When it comes to feeling confident that you are getting the best personal loan rates and terms available, online lending networks can make shopping around simple.
By using an online loan network, like Credit Direct, you’re able to go through a prequalification process that uses a soft credit check to determine your loan eligibility with multiple lenders. From there, you’re able to view the best offers available to you.
Since most traditional banks don’t offer an online pre-qualification process, you won’t have the same ability to view your potential loan offerings and rates before applying. While this doesn’t mean you won’t receive a good interest rate, it can make the decision process more difficult by not having those important details ahead of time.
Level of Flexibility
Depending on your financial situation, securing a personal loan from a traditional bank may prove more challenging than an online lender. For instance, did you know that not all banks provide personal loans? And the ones that do often require applicants to be in good standing with their banks and hold a higher credit score. There may also be limitations to the types of personal loans available, and whether you’ll need to provide collateral to secure a loan.
Through an online lender, you’re likely to experience a higher level of flexibility when it comes to getting approved for a personal loan. Online lenders often work with a wider range of credit scores, which is extremely helpful if you’re rebuilding your credit. Also, because online lenders provide personal loans without restrictions on use, the specific reason you need one won’t be an issue.
Distribution of Funds
How quickly you need money will be another key factor when determining whether to use a traditional bank or online lender for your personal loan.
Typically, the turnaround time for processing applications and distributing funds is about 2-3 business days through a traditional bank. With online lenders, that process is often sped up with funds being disbursed as quickly as the next business day.
With all of this in mind, whether you choose to use a traditional bank or an online lender, it’s important to go with that route that best fits your personal and financial needs.
At Credit Direct, we make applying for a personal loan a quick and seamless process that can be completed 100% online! Our application takes just minutes to complete with no effect to your credit score. Apply online to review your offers now!