Online debt consolidation loans can help you with your debt struggles – but how different is it from the ones you can borrow from traditional brick and mortar banks?
Without a doubt, online banking is growing in popularity
According to one survey, more than 7 out of 10 respondents said they use online banking at least once a month. These respondents admitted that it was important for them to have consistent banking experience across different channels. If you think that this is mostly Millennials, think again. The survey revealed that even Gen Xers and Baby Boomers are using online banking to manage their finances.
Among the transactions done online includes balance inquiries, transferring of money, bills payments, and of course, online shopping. While it is not among the top reasons to use online banking, debt relief is also something that you can do. In fact, online debt consolidation loans is a legitimate and effective strategy that you can use to improve your current credit situation.
What are online debt consolidation loans
If you want to explore your options to get out of debt, the first place that you go to is the Internet. This is where you can get information about the different debt solutions that you have. This is also where you can start applying for online debt consolidation loans.
As the name suggests, this is a type of loan that you can use to consolidate multiple debts. What makes this appealing to debt-ridden consumers is the fact that the process is quite fast. Sometimes, online lenders can give their approval within a matter of minutes. You rarely have to wait more than a day to find out if you are approved of the loan or not. Within days, you can already get the money you borrowed.
The fast and efficient process is what makes it popular among borrowers. A survey showed that 4 out of 10 personal loan applications happen entirely online. Not only that, but it is also revealed that 9 out of 10 borrowers said that they completely understood the application – and this increased customer satisfaction.
But what are the advantages and disadvantages of borrowing this type of loan?
Pros of borrowing online
Obviously, debt-ridden consumers prefer to borrow online debt consolidation loans because it is convenient to do so.
First of all, you can easily browse your options and get to know the details without having to spend a lot of time on the phone. You can make a search and click on the link that catches your interest. If you do not like what you read on the site, it is easy to go back to your options and choose another link. Within a matter of minutes, you should be able to get a lot of information that would not have been possible if you use the phone to call different lenders.
And it is not just the website of the lenders that you can use to get information. There are websites that compare different lenders – making it easier for you to make a choice between your options.
Once you have made a choice, you can easily apply for the loan. Everything happens online – you do not have to print anything. You can get immediate feedback if you are approved or not. It makes the whole process fast and efficient. This is ideal if you really want to get started on freeing yourself from debt.
Cons of borrowing online
Of course, there are disadvantages of borrowing online debt consolidation loans.
The main disadvantage is a huge security issue that you need to take care of before you decide to borrow online. Make sure that you are only borrowing from a legitimate online lender. You need to look for the signs that they are operating legally. The website should have a lock icon on the URL bar and an https:// at the beginning of the URL. If the lender is also affiliated with reputable organizations, there is a chance that they are also legitimate. Protecting yourself from getting scammed is possible as long as you do your research properly and thoroughly.
There is also the risk of abusing the use of online debt consolidation loans. After all, it is very easy to apply and get approval. When you get into a tight situation, you can easily get the funds that you need. This can be dangerous. You need to make sure that you have a debt consolidation plan before you decide on anything. It is also important to borrow only when you have exhausted all the other options that you have. Try not to be reckless with your spending.
Is online debt consolidation loans the right option?
Now that you know a bit more about online debt consolidation loans, the question remains: is it the right debt consolidation strategy for you?
While it may seem like a convenient option to use, you need to ask yourself a couple of questions to determine if this is the right option for you to get out of debt.
What is your credit score?
If you have a good credit score, then there is nothing to worry about. You can choose among different options with the best of terms. However, having a bad credit score will not give the same results. While it will not leave you without options, it will admittedly be limited.
How much will you borrow?
Some lenders have a minimum and maximum limit to what they can lend. This usually varies depending on who the lender is. If you need more than that, you might have to go to a traditional bank so you can borrow more.
What is your income?
Obviously, the lender would want to know if you can pay them back. That is why they would be interested to know how much you are earning. This will help them identify if you can afford to pay back what you are borrowing.
These questions will play an important role in helping you determine if online debt consolidation loans will help you get out of debt. Ideally, the higher the income and credit score, the more options you will have in terms of lenders. Just make sure that you broaden your options so you will get a feel of what other lenders can offer.