When can an online loan be better than a bank loan?
May 7, 2019
Personal loans online take different forms. Banks and credit unions offer unsecured loans sometimes called “signature loans”. When it comes to online lenders, they offer personal loans that do not require a full credit check. Many credit card companies also suggest personal loans of the banking type.
Which option do you consider best when you have to borrow money? Does it depend on a specific situation? You need to ask yourself the following questions:
- How quickly will I get this money?
- How much do I need to borrow?
- What is my credit score?
- How long will the loan repayment take?
Let’s take a closer look at these conditions
The personal loan online is the best solution when you need money quickly. This lender allows you to get it as fast as it takes a day or two between the application and when it deposits the loan in your account. Banks and other lenders also rush to approve your loan at the earliest, but they take longer to define the actual conditions and deposit the money. Often, between the request and the moment when the borrower gets his money, it takes several days or weeks.
Many banks require you to borrow minimums that exceed $ 1,000. This means, for example, that you must claim an amount of at least $ 1,000, even if $ 500 is enough. As for personal loans online, their minimums are much lower. You will be able to borrow only $ 500 if you consider that this amount satisfies you.
If you want a larger amount, you will consider the bank loan a better option, especially if you want a secured loan. However, personal loans online will almost always fit the smaller amounts because you will be able to borrow exactly the amount you need.
This is the condition that most obviously differentiates the online loan from the bank loan. The online lender does not usually look at your credit score. Instead, he uses your salary check stubs and bank balances to judge your ability to repay the loan. That’s why a low credit score will make you choose the loan online. Banks almost always require a complete check of your credit. Maybe you will not be disqualified for an average credit score, but you will likely pay a higher interest rate. You will not be able to get a personal bank loan if you have a credit score below 650.