Searching for a loan online is getting more and more popular. It makes checking your eligibility for a loan quick and easy, but there are a few things to keep an eye out for.
What sort of online loan do you need?
Before you commit to taking out a loan, you need to be sure you can afford it. Make sure you’re not borrowing too much and that you’re comfortable you can repay the loan for the whole term.
There are three main things to think about when deciding what sort of loan is right for you: what you need the loan for, how much you want to borrow, and how long you need to repay it.
It’s important to think about how long you want the loan for because it can affect the amount of interest you pay. A loan paid back over a longer period might give you lower monthly repayments, but it could also mean you pay back more interest overall, which increases the total amount you need to repay.
How to get the best online loan
The benefit of looking for a loan online is that it’s often easier to search for and compare different loans. By comparing options from different lenders, you’ll have a better idea of what you can afford.
With us, you can search a range lenders to find out your loan options. We also show you tailored APR rates, giving you a more realistic view of what lenders are willing to offer you. And don’t worry, searching won’t affect your credit score.
How to compare online loans
To compare loans from different lenders, there are a few things to look out for:
- Representative APR. APR stands for Annual Percentage Rate and it’s the amount of interest you’ll be charged on your borrowing, as well as additional charges imposed by the lender.
- Monthly payments. When you compare loans, look closely at the monthly repayments. So while the APR might be low, it might not mean that the monthly repayments are affordable.
- Total cost of the loan. Make sure you know exactly how much the entire loan costs, including any interest you will pay.
Benefits of online loans
There are a number of benefits to searching for loans online. Here are our top ones:
Lower interest rates
Lenders who are online only may be able to offer lower interest rates on their loans because the lenders have less business overheads. That said, many high street banks also sell online loans, which often have equally low interest rates.
Easier to watch your balance
An online loan is easy to keep track of. You can look at your current balance easily, and any details can be updated quickly online.
Because there’s a big market for credit, more and more online lenders are appearing. This is great news for you, as lenders must compete with each other to offer the best price for their loans.
Easy to compare
Many online comparison sites present you with a list of the best rates from each lender.
Disadvantages of online loans
While there are several benefits to online loans, you should be aware of the disadvantages too:
Complicated terms and conditions
It can be difficult to understand some of the details of a loan and know exactly what you need to do if you can’t talk to someone face-to-face.
You can’t explain complicated finances
If your financial arrangements are complicated or difficult to explain, it can be tricky filling out online forms.
Online rates can be confusing
Representative APR’s are advertised by lenders to represent the rates that at least 51% of customers will receive. This means 49% of customers will receive a different rate, so don’t be surprised if your rates are different to those advertised.
Better rates might be from your bank
If you’ve been with the same bank for some time, it might be worth checking if you’d be able to get a preferential loan rate as you’re a loyal customer.