If there is one thing that most people share, it is the concern about financial security and money in general. Sooner or later, most people find themselves in debt –– whether that is credit card payments, mortgages, or anything. There are those that try to think of innovative solutions to their financial woes, so they start their own businesses or invest their money. But that is still a luxury that a lot of people cannot afford, so they end up taking loans. While loans do have their problems, they can often be a solution to your debt situation. There are plenty of different lending options, but the two most popular ones are bank loan applications and the online option.
So, what exactly is the difference between these two in particular?
Availability
When it comes to availability, there are a few differences between online and bank loan applications that you need to understand. After the global financial crisis of 2008, banks became more reluctant to give out personal loans, because they simply weren’t worth the risk. Things obviously became a bit easier with time, but as a rule of thumb, a bank would prefer if their clients dealt with credit cards rather than loans because the former have higher interest rates. Online lenders, on the other hand, are much more available and they don’t have the same problems with offering personal loans for whoever needs them.
Speed
A person who is looking for a personal loan wants to get it done as soon as possible, and they don’t want to go through a ton of paperwork to do so. Unfortunately, that is often the case with banks. Their loan application process is lengthy, and it takes a lot more time to get it over with. Online applications have much simpler procedures, and plenty of service providers don’t even need a hard credit check. So, the process is done faster and you can get your money as soon as possible. The loan approval process is generally fast with online lenders, which is helpful because you will need to take your time finding just the right lender.
Convenience
When it comes to convenience, online loan applications are obviously the winner. You can get the process done from the comfort of your home, at whatever time you want. You could do it at night in your bed, and you don’t need to go to a bank in the middle of the day or anything. You should also know that, depending on your specific situation, you could take whichever amount you need. It can be as low as £100 or as high as £10,000, which is great because people don’t always want to take large sums of money; sometimes it is just a couple of hundred pounds that you need.
Interest rates
Since in either case you are borrowing money, you will naturally want to know which is cheaper for you. It actually depends. Online loan application fees are generally cheaper than banks’, because the latter have running costs that are simply not available with online lenders. The interest rates, though, might be higher with online applications. This is because they are often unsecured loans, which means you are not putting up any collateral, and therefore you will have to pay higher interest rates.
With banks, you could use collateral to get a lower rate, and even if you got an unsecured loan, it will most likely cost you less in terms of interest in the long run. There is one thing that is definitely for online loan interest rates, though, and that is the fact that they are fixed. So, you will know beforehand just how much money you will end up paying by the time the loan duration is over. Banks, however, might charge varying interest rates, which can be quite tricky to manage.
Flexibility
A very cool option you get with online loan applications is the ability to get low payments if you want, as mentioned earlier. More importantly, you can get those low payments over short periods of time, which means you won’t have to pay interest rates for too long. With banks, it is a bit different. A loan duration is often fixed, and it will not be less than six months in most cases, which might not work for you.
You definitely need to carefully weigh your options before going with either choice. Bank and online loan applications each have their pros and cons, and you will have to consider all angles before making a final decision. In any case, when it comes to online loans, you always need to shop around until you find the best offers available.