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What are the Different Types of Online Loan Services?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 23 March 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Online loan services make it possible for consumers to find and compare various loan options, all without ever having to leave the comfort of their own homes. In recent years, the range of online loans available has expanded greatly, making it possible to obtain money for just about any purpose with little or no trouble. Some of the more common loans processed online today include short-term and long-term personal loans, mortgages, debt consolidation loans, and even student loans.

One of the most popular online loan services today is the short-term payday loan. Loans of this type are granted within minutes of verifying the applicant’s information, and the funds are transferred to the applicant’s bank account, usually in less than twenty-four hours. On a specified date over the next few weeks, the lender drafts the amount of the loan, along with any applicable loan fees, from that same account as the means of settling the debt in full. This type of loan is ideal for quick emergencies that must be addressed before the next paycheck is received, but be aware that the interest rates are extremely high.

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Another popular example of online loan services is the debt consolidation loan. Here, the idea is to combine current debt obligations into one manageable monthly payment. Lenders provide online loan applications that applicants fill out and submit electronically. If approved, the lender prepares and forwards payments to the client’s creditors, then initiates a monthly draft on the applicant’s bank account. In some cases, the lender may issue a payment booklet to the borrower that can be used to mail in payments. More commonly, the borrower has online access to his or her account, making it possible to submit payments and check balances at any time.

Some banks offer personal loans through online loan services. Applications for loans for cars, home financing, or even simple signature loans may be submitted online, reviewed, and a response provided to the applicant within anywhere from a few minutes to a few days. Both secured and unsecured loans may be applied for online, although the bank may require that approved applicants sign and return some paperwork by dropping the documents off at a local branch or returning the signed documents by post.

While online loan services are known to be convenient, not everyone is aware that the rates offered on some of these loans can be very competitive. Even traditional banks that choose to provide online lending services to customers may sometimes waive a fee or offer a lower rate of interest for part of the loan period if the application is received and processed through this medium. As with any type of lending situation, borrowers should compare rates and terms offered by several lenders, as well as look into the background of each lender that is considered a good option. Doing so makes it possible to secure the loan with the best possible terms, while also ensuring that the borrower is working with an ethical lender that has a good reputation in the industry.

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