Put simply, getting a loan online has never been easier. The Internet has made the process so quick and easy that an individual can apply for a loan in 20minutes and be approved within 24 hours. But with such speed, comes great responsibility; not all lending companies take this responsibility seriously. Never settle for speed over quality.
Lending companies that take their responsibilities seriously have implemented a number of important policies to help protect themselves and the consumer. First and foremost, they all do an affordability assessment: this checks whether a borrower can actually afford to pay back loan. They also check credit scores and inform borrowers of all the policies related to the loan, such as interest rates and late penalties. While it is important to know what constitutes responsible lending, it is even more important to know what types of loans there are out there, and which one is best for your financial situation.
Most popular loans issued today by reputable companies (Moneykey.com to give you an example) are flexible installment loans, single-pay loans, and line of credit loans. Single-pay installment loans operate much like payday loans because they provide quick access to small amounts of money. Flex-pay loans differ from payday loans in that they can be paid off in a series of installments. While nearly everyone knows about payday loans, lines of credit are a lesser-known option. Though many businesses have used this type of credit, relatively few individuals have. Banks have been hesitant about issuing this type of credit and have only recently started marketing this service. Nevertheless, when compared with payday loans and pawnshops, lines of credit offer significant advantages.
Though it is typically more difficult to qualify for a personal line of credit than for a payday loan, it will provide you with more money; moreover, a line of credit does not require collateral. Personal lines of credit work much like credit cards. Just like a credit card, they offer individuals a limited amount of money that can be spent and repaid during a specified period. Unlike a credit card, however, interest on a line of credit is usually charged immediately after the money is borrowed.
A line of credit is particularly useful for a self-employed person. Because they may have periods when work is not available—or encounter periods when payments are delayed—they may need to have emergency access to funds. While they may also turn to credit cards, they would be at a disadvantage because credit cards offer higher interest rates and less flexible repayment schedules.
A line of credit is also useful when someone has to make a number of difficult payments, but doesn’t know the total sum. This is often the case when trying to pay for home improvements or medical bills. These options are also useful when a vendor does not accept credit cards. In addition to all of the benefits discussed above, lines of credit allow customers the chance to establish good relationships with financial institutions. When used wisely, they may even help improve a credit score. There are many advantages in terms of speed and flexibility to taking out an online loan or line of credit loan, but it is up to the consumer to make sure they work with a reputable lending company.