One of the great benefits of the digital age is that it’s made just about everything more accessible. Whether it’s buying clothes or booking holidays, there are any number of things you can do with just a few clicks that were much more difficult in the past. If you’re in the market for a personal loan, you now have the option to apply for that loan online. But is it a good idea or would you be better served by turning by back the clock and heading into the branch?
In this guide, we’re going to explore some of the advantages and disadvantages associated with applying for a loan online to help you find the best deal in the most convenient way.
The advantages of applying for a loan online
- It saves time – Undoubtedly one of the biggest benefits of applying for a loan online is just how much time and effort it can save you. Many of the loans agreed with South African consumers are for small amounts from specialist online lenders like Wonga. Taking the time to travel to a branch just to borrow R4000 seems counterproductive. By applying online, you can have a loan agreed in minutes without having to leave the comfort of your home.
- You can compare loans more easily – Another advantage of applying for loans online is the ability to compare loans on a like-for-like basis much more easily. Rather than having to go from branch-to-branch in search of the best deal, consumers can use a so-called ‘soft search’ to find the best rates without lenders leaving a permanent mark on their credit record.
- They’re more accessible – It used to be the case that there was a relatively small number of lenders, many of which were reluctant to lend to anyone with a less than perfect credit record. These days, there are a tremendous number of lenders online, many of which specialise in providing loans to consumers who may not have had access before.
The disadvantages of applying for a loan online
- Interest rates – Although it’s certainly not always the case, some online lenders can have higher interest rates than those operating out of a physical branch. In some cases, you may even find that the same loan provider offers better rates in-branch than they do online.
- Shorter repayment terms – Typically, online lenders specialise in offering loans over a shorter term than loans you’re likely to access from a bank or building society. However, that is not necessarily a disadvantage, it just depends on the type of loan you’re looking for.
- They may be less established – Many online lenders are not as established as brick and mortar financial institutions like banks. That can increase their likelihood of going out of business, which could potentially create problems further down the line.
All in all, online loans represent a convenient and reliable solution for South African consumers and one which is gaining in popularity year-on-year. However, you should always consider the advantages and disadvantages of an online loan carefully before you choose to apply.
What are your experiences of applying for loans online? Is it really simple or would you stay well away? Please share your thoughts with our readers in the comments below.
