Finance & Insurance

The Pros and Cons of Online Personal Loans

Are you hard-pressed for cash? Do you need money urgently to sort out that home improvement project that is long overdue, or pay for a sudden medical emergency? Or maybe you need to finance your wedding or pay for your honeymoon? You can always borrow money from a reputable lender and get an online personal loan. Getting an unsecured personal loan can help you fulfill various purposes without having to sell off any assets or put up your house as collateral.  

Online personal loans are very attractive especially when you need quick cash. Let’s look at some of the pros and cons of getting online personal loans in detail and see if taking one is the best decision for you.

What Are Online Personal Loans?

As the name suggests, online personal loans or Insta loans are unsecured loans that you can borrow from an online money lender and get money in your account within a short period, usually in 24 to 48 hours. The loans are given virtually meaning that you do not have to visit any bank. 

Here are 3 Pros of Online Personal Loans.

1. There is No Need for Physical Submission

Getting an online personal loan does not require you to visit your local bank to submit documents for screening. This means that you can apply for a loan from anywhere in the country and at any time and get the money while sitting at home or going about your business. The documentation required is usually very minimal as well. Ideally, the loan vendor will only ask you to upload the required documents such as your proof of identity, your address, and your source of income and you can do this using your smartphone. 

If you are a repeat customer, you can even get a pre-approved loan since the lender already has your documentation. Once the process is complete and your application is successful, you will not need to go to the bank because the funds will be channeled to your account within 24 hours. This saves time and effort, and if you are working with a transparent and legitimate lender you can be sure that your information will be kept completely confidential. 

2. You Can Get an Online Personal Loan to Cater for Anything Including Emergencies

Online personal loans are so versatile and that is why they have become so popular. Need to finance your wedding but your budget is tight? You can apply for an online personal loan and get money as fast as possible. Online personal loans can also sort out personal emergencies. Every second in an emergency situation is crucial. When you are going through a medical emergency or you are dealing with a plumbing emergency such as a burst pipe or maybe your car has broken down in the middle of the road, an online personal loan can be the answer. 

All you have to do during such situations is to visit your preferred online lenders’ website or mobile app, submit an application and if you qualify, you can get the money on the same day. An important advantage of online personal loans is that the decision-making process is very fast. The lender will respond to your query on whether or not you have qualified for the loan almost instantaneously. And because emergencies are time-sensitive, the last thing you need is to sit around waiting to know whether your application has succeeded or not. 

3. Flexible Repayment Options

When applying for an online personal loan, you need to know that borrowing limits vary from one lender to another with some offering up to $100,000. However, many online lenders will offer flexible repayment terms so that it is convenient for you to pay your loan. Be sure to apply for a loan that is tailored to meet your current needs and is less risky for you at that time.

The Cons of Online Personal Loans

1. Online Personal Loans Come with Fees and Payments

When looking for an online personal loan, make sure that you keep a keen eye on fees and payments. Some online lenders charge hefty penalties if you pay your loan late or when you have insufficient balances to pay up the loan. Some lenders also charge prepayment penalties therefore be on the lookout for that.

2. Online Personal Loans Can Lead to Credit Damage

It is important to remember that online lenders also report defaulters to credit bureaus. If you default on your online personal loan, chances are, your credit score will go down and this can make it harder for you to borrow in the future or make you pay higher interest rates to compensate for your defaulting risk.

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