5 Things You Have to Know about Online Loan Applications

Young couple doing an online loan application from home through a tablet

Loans can offer you a short-term solution to financial problems and online loans are easy to complete. If you’re thinking about an online loan application, then here are some important things you should know.

Can I Apply?

If you’re thinking about getting a loan, there are many things to consider. Most companies don’t ask for collateral, and instead check your credit rating. This means you won’t need to offer your car or house, but you will need to show you’ll be able to repay the loan. You can check your credit rating by using apps such as Experian. Please remember that failure to keep up with your repayments will result in a poor credit rating.

What Rates Will I Pay?

The rate you’ll pay depends on the online loan you get. Use a reputable provider, and steer clear of the companies you see on TV. These companies offer instant cash charge extortionate interest rates, and it’s not worth the extra payments. Loans vary in their interest rates, but some figures suggest that you’ll pay 9.9% APR. The interest rate gets lower as you borrow more money, but anything over £25,000 will have an interest rate of 3.3% or over.

The Types of Loans

If paying a fixed amount of money back each month sounds ideal, then a personal loan is the best choice for you. Some people choose a secured loan, but if you don’t meet your repayments the provider can claim your home as collateral. Loans can have variable interest rates, so you could end up paying a lot more than you initially borrowed.

Changed Your Mind?

It’s vital you remember that signing on the dotted line doesn’t mean there’s no way out. In fact, loans have a cooling off period in case you no longer want the money. Most companies give you up to 14 days to cancel the loan and 30 days to pay the amount you borrowed back.

Things to Remember

Online loans are great if you need some short-term financial support and can pay the amount back in the long-term. However, many find themselves in debt after taking out a loan. The interest rate increases, and what seemed like a good idea can put you on the path to financial destruction. Think about the alternatives and use an online loan as a last resort.