Traditional vs. Online Loans

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Cheap online personal loans are very different from traditional bank lending services and conventional payday loans. We’ll explain the differences among the three types of borrowing here.

Bank Services

Most of our visitors seek out viable lending options because they cannot meet the tough qualification standards of traditional lenders like credit unions and banks. These lenders go to great lengths to examine a potential borrower’s financial record, income, current debt, and other factors. If you are struggling with your finances, you may fall short of these approval criteria. Similarly, many lending services from traditional banks are secured, meaning they require the borrower to offer some form of collateral. If you fail to pay back the balance as you agreed, then the bank has the power to seize the property attached to the service to mitigate their losses. On the positive side, bank advances, especially secured ones, tend to have lower interest rates than other types of borrowing options.

Conventional Options

Conventional are those that borrowers must obtain from a physical lending outlet. Generally, how these services work is the borrower writes the lender a postdated check for the amount he/she wants to borrow plus the finance charge. On the borrower’s payday, the lender then cashes the check for repayment. For instance, if you wanted to borrow $100 and the lender's finance charge was $15, you would write a check for $115 dated for the day of your next payday. These products tend to have unnecessary paperwork and do not offer the rapid convenience of unsecured borrowing.

Affordable Options

The services our lenders offer are a new breed of borrowing. Instead of the hassle of writing postdated checks, the entire process is handled electronically. You can complete an application on a lender’s website rather than visiting a brick-and-mortar location, and the turnaround time is significantly faster. Compared with traditional bank options, unsecured options have more relaxed eligibility criteria, which puts them within reach for more borrowers. The chief concern of most online payday lenders is your monthly income, not your financial history (varies by lender). Thus, even if you’ve made a few mistakes with your finances in the past, you have a chance at qualifying as long as you meet your lender’s income requirements (qualification requirements will vary). Finally, online personal loans are repaid in one quick electronic transaction rather than the drawn-out payments you would have to make to a traditional bank or credit union.

If you are still unsure about which type of solution is right for you, visit Personal Loan Advice.