Did you know that a recent survey found that over a quarter of Canadians are struggling financially? If you fall into this category, you know that any unexpected expense is enough to send your life into economic upheaval.
The good news is that online loans may be a way to keep you afloat until you can pay your debts. But what exactly are the pros and cons of these loan types?
If you want to learn the answer to this question, you’re in the right place. In this guide, we’ll help you decide whether these types of installment loans are right for you.
What Are Online Loans?
Before we begin, it’s important to first answer the question, What is an online loan? Typically when you get a loan through a bank or traditional lender, you need to go through a rigorous, in-person screening process.
An online lender differs in that you can apply and get approved all from the convenience of your home. Getting these types of loans can be much faster than traditional loans.
They also require much less documentation, and you typically don’t need to secure them with any collateral. That being said, online loans are much smaller in size than bank loans.
They also come with some other cons that you should be aware of before you begin applying for them.
Let’s go over the pros and cons so you can decide if they’re right for your needs. But first, make sure you’re familiar with the different types of online loans by checking out our guide.
Pros of Online Loans
We’ve already touched on some of the pros that come when you apply for a loan online.
In this section, we’ll go into more detail about these benefits. That way, you can get a better understanding of them when compared to traditional loans.
For many people, convenience is a big pro for online loans. It can be hard and stressful to find a ride to a traditional bank. And when you go, you need to bring a whole plethora of different financial documents.
With online loans, you can get approved without ever leaving your bed. Most online loans are unsecured. That means you don’t need to potentially put your house or car on the line to pay for them.
As we mentioned before, with traditional loans, you’ll often need to wait weeks to find out if you’re approved or not. For people that need money for emergencies, this simply isn’t fast enough.
That’s where another pro with online loans comes into play. With these installment loans, you will typically find out whether or not you get approved within minutes or hours.
Once your application is approved, you will usually be able to access the funds by the next day. This makes it a great option for people who don’t have the time to wait for traditional loans.
Small Loan Amounts
Some people might think that the small loan credit limits are a con. But we think they can be thought of as a pro. Getting a small loan from a bank can be incredibly difficult.
Often people need just a few hundred dollars to pay for rent, utilities, groceries, or similar emergency payments.
Because of this, online loans can be the perfect solution for people that only need to borrow a small amount of money.
Flexible Payment Plans
Online installment loans will typically give you a lot more options for how you pay back the money you borrow. If a payday is coming up, you can pay the fast loan off quickly with short installment payments.
Or, if you won’t have the money anytime soon, you can break the installments up into payments you can actually afford. This flexibility allows you to choose the best loan option to fit your specific needs.
Cons of Online Loans
There’s no such thing as a perfect loan, and online loans certainly come with some drawbacks to be aware of.
You can make sure to consider these cons carefully. If you aren’t careful, you can get into even more financial trouble.
Higher Interest Rates
Just because you get an online loan doesn’t mean that it will come with a high-interest rate. However, because these loans tend to be unsecured, you will likely get a higher APR than if you went with a bank.
That being said, the interest rate you’re offered will ultimately be reflected by your credit score. If you have a high credit score, you’re going to get a lower interest rate.
But will you be able to get a loan if you have a bad credit score? The good news is that providers like Tekaloan cater to people with low credit scores.
We look at whether or not you’ll be able to pay for the loan instead of judging your past credit history.
Sadly, there are a lot of scam artists out there that pose as online loan providers. These people take advantage of people in tough situations by stealing their financial information.
You can avoid them by doing the research before you apply for an online loan.
Make sure you read online reviews to verify they’re the real deal. The longer they’ve been around, the less likely you are to be a victim of a scam. You should also check out these tips on avoiding cybercrime.
Smaller Credit Limits
We mentioned you’re likely to encounter smaller credit limits when you take out an online loan.
This can be a problem if you need to pay for an expensive medical bill or car repair. So, if you need a higher credit limit for your loan, you might be better off going with a traditional loan.
Need an Online Loan You Can Trust? Contact Tekaloan
We hope this article helped you learn more about the pros and cons of online loans. Here at Tekaloan, we know that the people who need short-term loans the most often don’t have the credit that’s needed for them.
That’s why we offer quick loans without a credit check. Instead, we look at data that pertains to your financial future, not your past. So if you’re ready for the money that you need, contact us today.