Borrowing money from a bank or other traditional lenders is not always an option. This is usually the case of individuals who either have a low credit rating or who are looking to get a good deal for a future loan and do not want to give lenders the impression that they are unable to administer their personal finances. Regardless of the reason, if you are unable to go to a regular lender in order to get a loan, the only legal option is to borrow money using an online service.
The fast development of internet banking has led to a very large number of lenders offering their services through online platforms. These websites have several advantages that are great for individuals who do not want their loans to leave marks in their permanent financial records or have an impact on their credit rating. However, there is more to these than the fact that using them does not have any permanent consequences. Here is what you need to know:
Online loans are fast but expensive
Unlike the loans offered by banks, online ones do not have standard terms and conditions. Each lending platform will set different interest rates for their deals, which are usually higher than the ones that you would get from a bank. The reason why most online lenders attach higher rates to their loans is mainly the fact that there is more risk involved on their behalf.
Most online lending platforms will not look at your credit rating when lending you money, which means that you can borrow even if you have a bad relationship with your local bank. Depending on your circumstances, this can be an advantage or a disadvantage, because the guaranteed payday loans will not be reported to credit registers, at all. In other words, the transaction won’t have any impact on your permanent financial record, positive or negative.
Speed is also important when it comes to online loans. In most cases, you will get the money in under 24 hours, however, the deals come with several limitations that you must take into account. First of all, the term of the loan will also be extremely short when compared to bank loans (6-18 months, depending on how much money you borrow). Secondly, the penalties are huge, especially if you can’t make the monthly payments on time.
P2P lending platforms can be lifesavers
Another option to find financing if you’ve got a low credit rating is to use P2P lending platforms. These websites only serve as mediums through which borrowers meet lenders. This means that you will essentially borrow money from another user, however, the platform will set the interest rate that you will have to pay and will also take a small fee from what the lender makes.
Once you find a P2P platform that you like, borrowing money is as easy as creating a new account, submitting your loan request and then waiting for a lender to agree to finance you. Depending on what information you provide when creating your profile, and on the amount of money that you need, this process can take up to a month. The main advantage of these websites is that interest rates are relatively low when compared to online lending services.
Go for the one that suits you best
Both of these options will allow you to borrow money regardless of how your credit rating is, however, each caters to the needs of different types of individuals. If you need to borrow money as fast as possible, you can get a next-day online loan. The downside is that you will have to pay high interest rates. On the other hand, if your need isn’t urgent, it may be better to borrow money using a P2P lending platform.