Shopping for loans online
Online loans are becoming increasingly popular because they are typically quick and easy to obtain. The most popular online loan is an unsecured personal loan as the process can be completed entirely online.
An unsecured personal loan is not secured against your property and is typically taken out between one and five years. If you are looking for a loan online, Freedom Finance can provide you with quotations from different lenders tailored to your individual needs, without impacting your credit score. Find out more about the Freedom Way.
There are two main factors to take into consideration when deciding which loan is right for you. When purchasing a loan, you need to consider how much you are looking to borrow and how long you want to borrow the loan for.
If you need to borrow money to cover the cost of a product, for example: a car, then you want to make sure the loan covers this cost. However, you also need to ensure that you are not borrowing more than you need or more than you can afford.
It’s also important to consider how long you want the loan for. A longer term loan may mean reduced monthly payments, however, it could also mean higher interest payments, which increases the total amount borrowed in the long run.
The benefit of looking for a loan online is that it is often easier to search around and compare different deals. By comparing, you can be sure you’re getting the best deal for you. If you use a broker like Freedom Finance, you can get tailored quotes based on your individual circumstances online, without harming your credit rating.
To compare loans from different lenders, there’s a few things you should look out for.
There are several benefits of searching for loans online. Here are our top benefits:
Lenders who are based solely online promise to offer reduced interest rates on their loans. This, they say, enables them to offer the consumer better interest due to the money they save from reduced overheads. It must be said however, that some high street banks use this method in selling their own online loans, which usually have an equally low interest rate.
An advantage of an online loan is that it is easily accessible. The current balance can be easily checked and any changes to your details can be updated quickly and efficiently rather than having to visit a high street branch.
Due to the growing market for credit during the recession, more and more online lenders are appearing. This is great news for the consumer as these lenders must be competitive in their pricing to make them more appealing than their contemporaries.
Many online comparison sites present tables displaying the most attractive rates from each lender. However, these rates are usually reserved for those with the best credit rating. In fact, lenders only have to sell their most attractive rates to 51% of their customers, which means that 49% will be rejected, and incur a detrimental mark on their credit file.
The solution to this is to use ‘soft search’ tools offered by Freedom Finance, which don’t leave an impact on your credit file. This allows potential borrowers to seek the most suitable loan based on their individual circumstances, giving an actual quote rather than an impersonal rate table. The aim of this is to reduce rejections, which are harmful to your credit file as no footprint is left until a formal application is made.
Your personal details can be inputted privately rather than having to discuss your circumstances in front of a room full of strangers at the bank. Also you may not feel comfortable divulging your personal circumstances to a bank manager, whereas the ‘faceless’ online lender takes away this problem.
Whilst there are several benefits for online loans, you should also make sure you are aware of the disadvantages before you make the purchase.
Some customers value the explanation that a face-to-face loan consultation can provide and feel more confident in what is expected of them in terms of repayment and changes in circumstances. Some people prefer to ask specific questions which may not be available online.
Individuals who have complicated financial portfolios may feel more confident discussing these matters to a financial advisor or bank manager rather than trying to fit within the parameters laid out by online application forms.
Online lenders will advertise their best possible interest rates to attract custom. However, only 51% of successful applicants need qualify so 49% may be charged higher than they originally thought, and so would need to search again. A face-to-face lender would give you the specific rate based on your circumstances so you wouldn’t feel you were missing out on a better deal.
If you have been with the same bank for some time, it may be worth checking if you would qualify for preferential loan rates through being a loyal customer.
Whether you're planning on some home improvements, replacing your car or simply getting your finances in order, a loan from Freedom Finance could be more affordable than you think. Use our calculator above to find the ideal loan for you. All quotations given are for illustrative purposes only. Credit subject to status. The rate you are offered will depend on your personal circumstances, credit assessment procedures and other related factors.