Now that the holidays are over, the credit card bills are rolling in. Maybe you’re wondering how to catch up on bills you neglected, so you could attend parties, make delicious dinners and buy gifts for your loved ones. Perhaps unexpected events caused you to get in a financial bind. When traditional lending avenues seem blocked, you may want to consider the online lending industry. To protect yourself and your hard-earned cash, follow these tips when shopping for an online loan.
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Check Your Credit Score
How is your credit score? Your credit score will have an impact on what types of loans you’ll be eligible for and what interest rates you may secure. Your credit score can decide if you need collateral to secure the loan.
There are many types of loans available online. These can range from online installment loans for emergency situations, such as cash advances for the family member who is in the Emergency Room or payday loans, and many more. Asking some questions can help you decide which loan is right for you.
How long do you have to repay the loan? If you need some quick cash for a minor emergency and need just a little time to come up with the money, consider a payday loan or cash advance. These types of loans were created for these types of emergency circumstances.
Once you decide which type of loan you need, you must sift through the plethora of lenders. After finding potential lenders, you have to narrow down the list to one. Start by researching each lender through the Better Business Bureau or the Consumer Federation of America. If you find nothing at either, a search in your favorite search engine can yield a lot of information.
Remember that a few negative comments are possibly the result of a bad experience, but multiple complaints raise red flags. Ask around about companies your friends or family may have used; personal references give the best and most accurate information.
Income versus Output
Before signing the dotted line on any loan, you have to really consider a few key things. Is the money you’re borrowing for something you need or something you want? That Mexican vacation may seem necessary, but it’s not nearly as important as paying off delinquent medical bills.
If you’re using collateral, consider what may happen if you default on the loan. Not that you would intentionally default, but with unemployment near ten percent, you have to consider the worst-case scenario. Home- or auto-secured loans can have detrimental consequences if payment isn’t made. In this economy, you should consider job security, raises versus inflation, and benefit expenses into your decision.
Online lending has revolutionized the borrower’s market and opened many doors for people who need a little extra help. Using common sense along with these tips will help you make the best decision.
What other things should one consider when getting loans online? Share your thoughts in the comments section.