Key Points to Keep in Mind Before Taking Online Loansby Mclaren V. Stories of latest Business Trends
To put it in general terms, an online loan is simply a loan that you can apply online, from a bank, a non-banking financial company (NBFC), or a credit union. In general, getting a quick loan with a bank may not be possible as banks usually do a lot of documentation work, and their criteria is also strict. NBFCs can be a better choice as they do offer loans with minimal documentation, no collateral, and many other advantages.
Points to Consider Before Applying for Online Loans
Before you apply online loans, you need to keep in mind a few important points such as:
Evaluate your need for a loan: There is a loan for every need right now in the market. But before approaching any lender, you need to think about your need for credit. Keep in mind that as soon as you take a loan, the repayment for the same begins. EMI is an added burden for you as you need to pay principle along with interest now. If your finances are tight, you may not be able to repay your EMI for the month, which may again put you into debts. So, evaluate your need for the loan and only take it if you really need it and only if you can pay it back.
Check your credit score: Before you apply for an online loan or online advance loans, you must check your credit score first. If you have a good credit score, you can definitely apply for a bigger amount. In case you don’t have a good credit score, your loan application may get rejected. Because a majority of the lenders consider a good credit score as your ability to repay the money without defaulting.
Check your debt-to-income ratio: The debt-to-income ratio plays a key role in the approval of your loan. It is the proportion of your income that goes towards servicing other debts. Usually, any lender will not be ready to offer you a loan if the debt-to-income ratio goes beyond 40%. So, if you already have a home loan, it is better you don’t apply for another loan. You can apply only if you have other sources of income that you can show to the lender.
Negotiate the interest rate: If you have a great credit score, you can negotiate the interest rate with your lender. The majority of the financial institutions are offering a lower rate of interest on online loans to those with better credit scores. Be aware of the general trend in the market before applying for a loan, so that you can negotiate and get a loan at a lower interest rate.
Read the fine print carefully: You know that loans come with many terms and conditions. You can find different kinds of charges such as processing fee, late payment fees, prepayment fees, and many other hidden charges. No one can escape processing fees or late payment fees, but hidden charges can be avoided, which can cost huge without even knowing. So, if you read the fine print carefully, you can ask your lender about it or choose another lender who doesn’t levy any kind of hidden charges.
Check other sources to get money instead of a loan: If you have other sources where you can get money without any interest, you can go for it instead of paying huge interest rates. You can also get money quickly if you ask your friends, family, or relatives. You can go for a loan only if you feel embarrassed about asking your friends or family.
So, these are the points that you need to keep in mind before applying for online loans.
Why Are Online Loans Better?
Online loans are better because they offer convenience. You can apply for a loan simply from the comfort of your home, and also get it on the same day if you choose the right lender.
Some of the top reasons to choose online loans are:
Simple application procedure: The online loan application process is very simple. You will have minimal details to fill in when it comes to an online application, unlike offline loans where you have to provide lots of information to the lender by filling in the hefty paperwork.
Faster process: The online loan process is faster. Once your application for the loan is approved, the lender doesn’t take much time to process it. Top lenders like Advance Financial approve your loan on the same day you have applied for it.
24/7 availability: Every lender has an app that is available on google play store and the app store 24/7. You can download the app and apply for a loan anytime.
Minimal documentation: Any loan app asks for minimal documents only. You can upload documents like your identity proof, address proof, and income proof to complete the process and submit your loan application.
Created on Jul 2nd 2021 01:09. Viewed 56 times.