I have been asked to write an article giving our readers a little economical insight. It seems that a lot of our readers do not have a whole lot of financial literacy, which is fine – I suppose that’s why we’re here in the first place. I hope you enjoy this explanation and that it assists you with furthering your financial goals and literacy.
There are a few key components to applying for an Online Loan. The critical aspects that you should be looking for are trustworthiness, turnaround time, security, legitimacy, privacy, and of course – arguably the most important – interest rates and terms.
Trustworthiness & legitimacy can usually be verified by third party verification sites like Verisign, or sometimes the BBB, Yelp, YP.com etc. If they have a historical presence online, and didn’t ‘magically come about’ in the last week – then they deserve a little more credit than some of the online spammer/scammers that have been surfacing of late – as seen in the payday loans industry.
Turnaround time is important, because if you need a loan by tomorrow, applying for a loan that won’t be ready for a week isn’t going to do you any good benefit. As such, always look in the terms of service / FAQ, or contact the sites support department to verify what their loan turnaround time is typically. Chances are it varies on a case by case basis, but at least you should be able to discern a rough estimate, which is always better than an uneducated guess.
Privacy is of the utmost importance when sharing your financial and personal data on any website. Typically any forms on an online loans site should be encrypted behind a secure socket layer protocol, although with the proper coding, this isn’t always crucial. Again, look for badges of trust – as some sites look to tertiary vendors to supply their security. This can be a good or a bad sign, so make sure to do your due diligence before proceeding with your application process.
Finally, we come across interest rates, and loan terms. I’ve saved the most important for last, because I really want this to sink in. High interest loans are nearly impossible for someone on a low fixed-income to pay off.
As such, beware of sites offering loans with APR’s in excess of 40%. Unfortunately, because anyone looking for an online loan, is most likely what is referred to in the industry as a sub-prime applicant – high interest rates are common, to help offset the risk of lending to individuals with bad or no credit history. Terms of a loan are also very important, because some loans will restrict you paying off the principal early, whereas other lending companies will allow you to pay off your loan ahead of schedule, and thereby avoid additional interest and fees associated with the loan.
Read, and read well dear reader. These tips may just save you from a gloomy financial future. Please leave your comments below.