The growth of online loan lending services has brought great competition between themselves and even to banks which have resulted in quality services. Don’t forget that this growth has also resulted in lots of fake online lending businesses which lead to scams.The presence of online creditors and local banks can bring a dilemma in choosing the best option between the two. If you are in this situation, then this article is meant for you. First, let’s look at what online loans and local banks are.
Online loans make it possible for you to perform the entire loan application online and be funded after approval. Once approval is done, money will be deposited straight into your bank account.Online lending can either be done by a traditional bank with an online presence or an online-based lender.
Local banks are business institutions that offer banking services to individuals in a small geographical area. These services include loan lending, depository services, ATM card issuance, customer care services, and many more.They tend to establish personal relationships with their customers.
What to Choose Between Online Lenders and Local Banks?
It’s important to look at the following factors and see which occasions best suit you. These factors are:
1. Application Requirements and Time Involved
Local banks normally have a lengthy application process compared to online lenders. Although the banks currently have tried reducing the application process, the bank procedure is still longer than online lenders since they have to “process the submitted forms, make necessary calls and look at your credit score before issuing the loan,” according to Goalry Mall.
On the other hand, an online loan application takes a few hours or sometimes minutes to complete.So, if time is not on your side, an online lender would be the best option.
2. Approval Time
Local banks’ approval time may even extend to seven days since they have stricter eligibility requirements than online lenders. You can even wait for those days only to be told that your application has not been approved.If you need an instant response, online lenders will better suit you. They normally give a response the same day of application but some extend to one business day.An online payday loan is known for its quick response and short approval period. You can get the loan a few minutes after application. To access better lenders, you can browse the best place to get a payday loan online.
Once your application is approved, funds are immediately deposited into your bank account.If your application is not approved, the quick response will give you time to apply to another lender or look for another alternative.
3. Interest Rates to Be Charged
Online lenders normally charge higher interests when compared to local banks especially for unsecured loans.Also, the face-to-face feature for local banks may give its user a chance to negotiate for lower rates and other favorable terms. Therefore, if you have a keen eye for your interests, a local bank will be the best option.
4. Costs and Fees Involved
The personalized service for local banks may come with some extra costs. It’s better to research these fees before going to the bank.Since online lenders don’t have a physical building to maintain, they tend to save a lot and some of them may choose to pass those savings to their customers by lowering their rates and fees. But this might not always be the case and so it’s important to again do your research.Go to the online lenders with less rates.
Most online lenders are safe. But as mentioned earlier, the growth of these lending institutions may bring scammers to the market, and hence it’s vital to explore. Read on customer’s reviews regarding a certain online lender and make sure the business is officially registered to operate.If you are not sure about a particular online lender, it may be safe to go to a local bank.
Choosing between an online lender and a local bank does not have to be that difficult. Just know which occasion is best suited for which loan lender.