There have been a lot of advertisements that stress the ease and convenience of online lending in recent years, but many of them don’t actually mention much of the process involved in applying for and receiving online loans.
In order to make sure that you understand what is involved in finding online loans before you actually try to apply for one, this article is designed as a brief overview of the online lending process.
This way you can learn about how online loans work, what sort of collateral is generally required, how you receive your loan money, and how you will likely go about making payments on the loan once you have it. You will also find some information below about how to compare the offers of different lenders so as to make sure that you’ve found the best loan that you can get.
How online loans work
In order to make sure that you get the most out of your loan, it’s important that you understand how the lending process works from the very onset of your loan search. When you apply for a loan over the internet, the application that you submit will be transmitted electronically to the lender that operates the lending website that you’re applying from.
You may be contacted by phone, or have paperwork that needs to be printed and mailed; it depends upon the individual lender as to what extra steps must be taken. The lender will review your application, check your credit, and take into account the value of your collateral before contacting you via e-mail or telephone with their loan decision.
Because of the manner in which online lenders do business, they often have specific requirements in regards to collateral for online loans. Some lenders will allow a wide variety of collateral items, whereas others will only work with specific types.
One of the most common types of collateral for online lenders is the equity that you’ve built up in your home or real estate, since it is easy to work with electronically and has a high enough value in most cases to secure even larger loans or loans for individuals with poor or bad credit.
Receiving your loan
Since lenders who operate online don’t have a physical storefront that you can visit, in most cases you will receive online loans as an electronic deposit to your current chequeing or savings account. Depending upon the lender, however, you may also have the option to receive your loan as a cheque or via other means offered by specific lenders.
Much like the manner in which you receive the loan itself, with many online loans you’ll be making payments via automatic electronic debits from your chequeing or savings account. The exact method of making payments will depend largely upon the lender that you’re getting the loan from, as some lenders allow you to send in payments via other methods as well. Make sure that you know what payment options a lender offers before accepting their loan offers.
Finding the best lender
In order to get the most out of your loan, it’s important that you take a little bit of time to shop around and see what interest rates and loan terms different lenders are willing to offer you. Request quotes based upon the amount that you want to borrow and the value of the collateral that you’re using, comparing these quotes to each other in order to determine which lender truly has the best loan to meet your needs.