When it comes to loans, you essentially have two options: bank loans and online loans. Each option has its advantages and its disadvantages. So how do you know which one is right for you? That’s a matter not only of what kind of loan you want, but also of what kind of loan application experience you want.
How’s Your Relationship with Your Bank?
The kind of relationship you have with your bank has a lot to do with which type of loan would work best for you. If you know people at the bank, particularly the loan officer you would be working with or the manager, a bank might be the way to go. This is especially true if your credit is right on the edge of being high enough to qualify you for the loan you want. This pre-existing relationship might easily make the difference between getting the loan and not getting it.
Additionally, there’s the advantage of having a face to face interaction while applying for the loan. Online, it’s all a numbers thing, very impersonal. At the bank, the ability to try to convince the loan officer in person can give you an extra edge, especially if you already know that person.
Online Loan Applications Have Several Advantages
If you don’t have any special pre-existing relationship with your bank, and if you don’t think the personal touch is really going to give you a decisive advantage, then online loans may work out much better for you. For one thing, they’re cheaper, sometimes a lot cheaper. Banks have high operating costs because they have to maintain physical locations, and these costs usually get passed along to customers in the form of higher rates. Without the costs of a physical location, online lenders typically have lower rates.
Then there’s the matter of speed. While the standardized processes of online lenders might not allow for the personal touch during the application process, it does have the advantage of speed. Banks typically take much longer to process loan applications. If time is a factor, you could get an online loan several days faster than you could get one from a bank. In fact, you can often get approved and get the money on the same day you make an application when you go the online route.
Then there’s the tricky matter of your credit score. Bank loans put you in a bit of a bind when it comes to your application, and online loans don’t. You see, banks don’t typically have a pre-qualification process that allows you to see the loan terms, including the rate, without negatively affecting your credit. This means that you either can’t tell ahead of time if the loan you are asking for is really a good fit or you have to take a hit to your credit. This isn’t an ideal situation. Online lenders, on the other hand, often do have such a pre-qualification process, one that does not negatively affect your credit. With online lenders, you can safely get a better idea of what you’re doing before you try to do it.
How Safe Are Online Lenders?
Some people are a little nervous about the idea of doing business with an online financial institution. However, online lenders depend on their reputations, just the same as any other business does. It is therefore in their interest to make sure that everything is secure, reliable, and free from any shady business. As long as you do business with a reputable online lender like CashFlex, you are at no greater risk than you are from taking a loan out from a bank.
Of course, when you use an online lender, you often need to grant access to your bank account, Social Security number, and so forth, and not everybody is comfortable doing that. If you are not technologically savvy, and if you are unable to tell a reputable online lender from a risky one, you should get the assistance of somebody who does know what they are doing, or just use a physical bank.
The Takeaway
If you have a good relationship with the people at your bank, particularly the loan officers, a bank loan might be the way to go for you. This may also be the case if you really need the personal touch during the application. However, if you are looking for lower rates, faster processing, and more transparency, an online lender may be much more suited to you.
