Many lenders offer installment loans online. However, most people don’t know enough about them to separate the good from the bad. To them, an installment loan is an installment loan, no matter the lender or product.
This is unfortunate, because there are definite differences between lenders and installment loans online. Let’s take a look at seven things you should know about them and what sets the good above the bad.
Not All Lenders Are Reputable
Good installment loans online are extremely convenient. You can apply at any time of the day, from any device. The lender’s website lets you choose what type of installment loan you need. They should also offer the range of loan amounts they offer as well as term lengths and starting interest rates.
Additionally, the best lenders offer in-depth information on their company, the application process, installment loans, and repayment. Their website should answer frequently asked questions to alleviate any confusion too. Finally, they should be licensed to lend in your province. Licensed lenders must adhere to provincial and federal lending laws which protect you as a consumer.
Regrettably, just because a company is online it doesn’t mean they’re transparent, helpful, or licensed. Unlicensed lenders can use unethical tactics and can also scam consumers. If what a lender offers seems too good to be true, they probably are.
For instance, some lenders promise near total approval. Of course, no reputable lender would risk granting a loan to someone in a horrible financial state. If they did, they would have to balance the risk by charging extremely high interest rates and exorbitant fees. Steer away from lenders that promise the moon. There will be a catch.
All reputable lenders do some sort of review before they decide to lend. However, online lenders often do not use the same the criteria as traditional lenders.
You Want a Streamlined Application Process
Not all lenders that offer installment loans online make the application process easy. They may want as much information as a mainstream lender, which could include your work, residence, and banking information over the past three to five years.
Naturally, providing this much information negates the convenience of an online application. You probably don’t want to spend hours digging up old information just to apply for a loan. The whole idea of an online application is that it saves you time and hassle.
Luckily, good installment loans online do offer a streamlined application process. The lender will need identifying information such as your name, address, phone number, bank details, employer, etc. However, they aren’t interested in your life history. They are usually only concerned about recent months.
Good lenders will often grant an installment loan to anyone with at least three months employment, banking, and residence stability. As a result, your application form will be short, easy to complete, and convenient.
They Usually Have Less Stringent Requirements
We mentioned that online lenders may not have the same qualification requirements as mainstream lenders. Generally, installment loans online are less stringent as lenders cater to borrowers that mainstream lenders ignore.
As an example, a mainstream lender may turn down an applicant if they’ve changed jobs in the past few years. They could also reject an application if a person moved recently. It is not unusual for a bank to refuse a person for a loan if they’ve switched banks too. Fortunately, these applicants can still obtain installment loans online through alternative lenders.
The same applies to those with less than pristine credit. Most mainstream lenders only consider applicants with at least “good” credit. While credit scoring models do vary, it is generally accepted that an applicant must have a minimum score of between 660 and 724.
Once again, installment loans online could be your answer. Good lenders consider many factors beyond your credit score alone. Some lenders utilize an artificial intelligence assessment which looks at many, many factors. If you have a steady job and a reasonably debt-to-income ratio, chances are you could qualify for installment loans online.
They Should Use a Soft Credit Inquiry
Most, but not all, online lenders use a soft credit inquiry. Absolutely check this before you apply.
Why? Soft credit checks are meant to provide a high-level overview of your credit health, without all the details. As a result, they don’t impact your credit score.
Hard credit checks provide the lender with all your credit details. Every inquiry lowers your credit score slightly and each one stays on your credit file.
If you’re turned down by one lender, the next may look at your file and see the inquiry as a red flag. Repeat the process a few times and your prospects for a loan get dimmer and your credit score drops too.
The Lender Should Decide Quickly
You would think that an online lender would be able to decide whether they’ll lend to you quickly. However, not all companies use sophisticated software and many have cumbersome forms and workflows.
A good lender provides a decision within minutes. The process is fully automated. Once you submit your application, you should be able to kick back, have a coffee, and come back to a decision in your in-box.
If you complete an application and still haven’t heard from them in hours, you will definitely want to look elsewhere. After all, approval is just part of the process. You’ll still need to sign papers and then they will transfer your money. If they took that long with your application, you can’t expect what’s to follow will go quickly.
A Good Lender Offers a Rapid Funds Release
Pretty much all lenders that offer installment loans online state you’ll have your money quickly. But what does that mean? Is it within the day, a few days, or a week?
Look for a lender that will start your loan payout as soon as you sign your electronic loan agreement. In most cases, you should expect money in your bank account within 24 business hours, or the next business day if you sign after hours.
You Shouldn’t Pay an Origination Fee or Prepayment Penalties
You might be surprised to know that many lenders charge a fee just for setting up your online account. This might not seem too absurd, except this fee is a percentage of your loan amount. Fees can be as low as 0.5% or as high as 8.0%.
Additionally, many online lenders charge prepayment penalties. These apply if you want to make extra payments, larger payments, or pay your loan off early.
In either case, you should never have to pay these. Look for lenders that offer installment loans online without these fees or penalties. You should never pay them.
Installment Loans Online Through FlexMoney
FlexMoney offers installment loans online, without all the fuss. Here’s what we offer and our lending requirements:
- Reputable, licensed lender
- Streamlined application – gather your banking and debt information and complete your application within 15 minutes
- Artificial intelligence assessment for a full financial picture
- Soft credit inquiry
- Decision within minutes
- Funds release normally within 24 business hours
- No origination fees
- No prepayment penalties
- Loans between $500 and $15,000
- Repayment terms between six months and five years.
FlexMoney offers very reasonable qualification requirements for our installment loans online. We consider applications from:
- Canadian citizens who are at least 20 years old
- Actively working with the same employer for at least three months (we will consider self-employment and pension income)
- Earning at least $2,000 per month in the last three months.
- Those who have a mobile phone and email address.
- Those with an open and active bank account with a Canadian financial institution showing at least three months of transaction and banking history.
We can’t consider your application if your income is based on Employment Insurance, the Disability Tax Credit, and government benefits related to COVID-19 either. Please do not apply if you are currently enrolled in an active bankruptcy, consumer proposal, or credit counselling program.
FlexMoney lends in Ontario, British Columbia, Alberta, Nova Scotia, and Newfoundland. We offer telephone, email, and online support. Visit our website for more information or to start the application process now.