Most online loan centers these days finance small personal loans, or payday loans. They claim to offer cheap loans online for people with no credit, or bad credit, and can be tricky to deal with because they charge very high interest rates. However, not all online loans are as risky on the surface. Today home finance loans, bank car loans, and bank home loans are all available with a loan application online.
Whether you are applying for a home finance loan, personal loan, or car loan, there are certain things that all lenders will look for when they review your online loan applications. Lenders will look for your payment and credit history, proof that you have income, how often and how successfully you have recently applied for other credit, and what kinds of credit you are currently granted. It is important to know what will increase or decrease your likelihood of financing so that you can plan accordingly.
While online loans are convenient, and sometimes quick ways to get approved for your financing needs, they are also risky because you are left to your own devices throughout the process. Seeking out professional student loan advice, personal loan advice, or car loan advice is your first step towards ensuring that you do not get in over your head when applying for online loans. So what could go wrong?
1. Default
If you successfully acquire a loan, but you do not understand the repayment terms, you could go into delinquency or default on your loan. Up to 15 percent of social security disability and social security retirement income can be seized by the government if you default on a student loan. Consider that average student debt was approximately 25,000 dollars in 2012, and about 40 percent of all student loan borrowers go delinquent on their repayment in the first five years of repayment. Even for the average person with student loan debt, going delinquent or defaulting on a student loan can be devastating.
2. Bad Credit
If you apply for a loan greater than what you actually need, you may find it difficult to make payments back on that loan. When you start to miss payments you may incur further debt in the form of late fees. After that the lender will report you to major credit bureaus, and your credit score will suffer. Ultimately, this will affect the likelihood of being granted credit in the future.
3. Repossession or Foreclosure
Applying for a bad loan, applying for too much or not enough money, and attempting to navigate a loan application without good counsel can, in severe cases, result in repossession of your car, or foreclosure of your home. Not only are you back to square one, but depending on the size of the loan and the collateral that is seized, other financial troubles may arise as a result.
Seek out advice, use caution, and at the very least do research and get educated on the loan process you are looking into before you ever hit submit. It is all too easy to coast through an application without realizing what you have agreed to.