Frederick Jace
As online loans continue gaining popularity among users due to their convenience, it’s important to note that not all online lenders are legit. Since online borrowing involves sharing personal data, yours could end up in the wrong hands if you aren’t careful. Other legitimate lenders may also offer exorbitant interest rates that make their loans more expensive. This can lead you into a trap of recurring debts that seem difficult to get rid of. Discussed below are six tips for choosing an online lender.
1. Consider the loan types a lender offers
Depending on why you’re borrowing, you can find various online loan options suitable for your unique needs. Different online lenders provide varying loan options, so look at the loan options they offer to determine if they’re an appropriate choice for you. Every loan option has features that make it unique. For instance, weekend payday loans are unsecured short-term loans issued to be paid back upon receiving your next paycheck. So visit an online lender’s site to check their loan options.
2. Check if the lender is legit
When looking to borrow money from an online lending company, you don’t want to end up in a scammer’s hands. As such, you should research to determine if a prospective lender is reputable. To determine if a lender is legitimate:
- Conduct a Better Business Bureau database search: Look for the name of a potential lender on the BBB website to determine if they’re real
- Check the lender’s site: Most legit lenders have websites with their domain name. The website’s URL on your browser should have a padlock icon to show that the connection is secure
- Look at the lender’s registration: Once you know the states within which a prospective lender operates, check the secretaries’ of state websites for those states to see the lending company’s name appears there. If the company is legit, its details will appear there. A legitimate lender also provides their license numbers on their website depending on the areas they serve
- Read online reviews: Before applying for an online loan, visit their website and other trusted third-party review sites to see what past borrowers say about that lender. Don’t forget to consider how they respond to negative feedback
- Research the physical address: When on the lending company’s website, check the contact details, particularly the physical address, then put in on Google map to determine if it actually belongs to that lender
- Conduct an online search: Running a quick online search on a potential lender helps you know if they’ve been involved or mentioned in any scams, scandals, or lawsuits. This can also help you find other helpful details
Before making a borrowing decision, look for red flags like requests for upfront payments and being pressured into taking a loan.
3. Shop around
Before borrowing from the first online lender you come across, consider shopping around and comparing several lenders to ensure you’re getting the best deal from the one you finally choose. When comparing lenders, look at the following:
● Interest rates
Interest rates help determine the cost of your loan and how much you’ll repay monthly. They’re significantly impacted by your credit score.
● Loan amount
People borrow money to satisfy particular financial needs. As such, check the minimum amount a lender can offer you to ascertain if they’re the right choice.
● Eligibility criteria
Check the requirements you need to meet to qualify for a specific online loan. This usually includes employment history, income verification, and credit score. Meeting the eligibility criteria boosts your chances of getting approved for a loan.
● Loan terms
Before settling for an online lender, ensure the loan terms they offer resonate with your financial goals. This gets you informed to ascertain that you don’t go for loan options whose repayments you can’t keep up with.
● Penalties and hidden fees
Before selecting an online lender you consider suitable for your needs, check if their offerings come with penalties and hidden charges. The hidden fees may include prepayment penalties, late repayment charges, and origination fees. This can help you evade extra costs that make loans costlier while enabling you to make informed decisions.
● Flexibility and extra features
Some online lenders offer more flexibility and properties for improved borrowing experiences. For instance, a lender can provide an option to change your payment schedule or early payment options without penalizing borrowers. However, you should analyze these additional features to see if they’re in line with your financial preferences and goals.
4. Look for security measures
Online loan applications require borrowers to provide lenders with valuable financial and personal information. Ensure potential online lenders have put sufficient security measures in place to safeguard your data. Ascertain that the lender’s website has secure connection agreements that guarantee that the information transferred between the lender’s server and your device is secure and encrypted.
Ensure that prospective online lenders have privacy policies outlining how your data will be utilized and protected. A Reputable online loan company will ensure they adhere to industry regulations by taking the necessary measures to ascertain that their client’s sensitive data is secure.
5. Check the customer service system
When looking for an online lender, ensure they provide quality customer support. If you find a lending company with good quality customer service, it shows that they value and prioritize their customer’s needs. They offer prompt responses to any questions or concerns you might have regarding their loan offerings. Top-notch customer service from an online lender assures you that they’re not just interested in what they’ll gain from you but your welfare as well.
Ascertain their availability during business hours or round-the-clock on phone, email, and other platforms. Pay attention to how they communicate with you because that will determine how your lender-borrower relationship will work out.
6. Consider getting recommendations
Recommendations are among the surest ways to get an online lender you can trust because they’ve been tried and tested by people you consider trustworthy. You can ask friends or family members to suggest online lenders they’ve dealt with before. Upon getting the recommendations, consider doing your own research on the suggested lenders to verify their reliability.
Endnote
Considering the many lenders available today, finding the most suitable for your borrowing needs isn’t easy. However, using these tips can make it easier to choose an online lender.
