You can find the best online lender by doing some research.
Philadelphia opened the doors to the first U.S. bank in 1791. It was a one-way process to obtain a loan.
You have many other options today, such as online lenders with lower overheads and potentially lower interest rate. But is it safe to do business with online lenders? We will discuss how to determine if you are dealing with a trustworthy lender and how to spot a scammer from a mile.
What are the benefits of an online lender?
Online lenders usually focus on specific types of lending, such as personal loans. Online lenders are more inclined to consider applicants who traditional lenders may reject. Because online lenders have lower overhead costs, highly qualified borrowers have access to perks like low interest rates and quick and easy response times.
Not all online lenders can fund loans. Some have partnered with traditional banks, while others use peer-to-peer lending, which involves investors funding loans based on the risk they’re willing to accept.
Online loans can be automated in large part, making it easy to quickly get approved and receive funds. Find out more at https://greendayonline.com/
Finally, while traditional financial institutions may have a narrow view of the clients they want to work with, there’s an online loan available to borrowers of all kinds, including those in search of a personal loan for borrowers with bad credit.
But is it secure?
The short answer is that online loans can be trusted. This is because online lenders must comply with the same strict lending regulations as brick and mortar banks. There are large names like Discover, Marcus by Goldman Sachs, and established leaders in the sector like Avant and Upstart. While there are certainly some good players, it’s easy to spot the bad ones.
How to vet a lender
These five steps can help to determine how trustworthy an online lender is if you find one that you haven’t heard of or are curious about the history of a company you know.
1. Check federal registration
Federal Trade Commission requires that legitimate lenders register in all states where they do businesses. You can check whether a lender registered is by typing the lender’s name into Google, followed with the words “state licences.”
Take, for example, “Upstart State Licenses.” You might have to scroll down a bit, but generally you will find a page with the registration numbers. If the registration numbers are not listed, inquire about the state where the lender is registered to do business and ask for them.
2. Call the office of the attorney general in your state
The state attorney general has the responsibility to protect your interests. To ensure that the lender in question is properly registered, give them a call. All you need is the name and address of the lender.
3. Find their rating with the Better Business Bureau (BBB)
While it’s true that the majority of reviews and comments about a company are written by unhappy customers, there is still a lot to be learned. But, ratings and comments can help you to identify what to avoid. In addition to Yelp, TrustPilot (Google Reviews), and TrustPilot sites, you can also get insight from these other sites.
4. Ask your friends and family
It is unlikely that your friends and family will steer you wrong. Ask people you know about personal loans, and ask them about their experience.
5. Make an online search
It’s tough for a bad player to keep personal loan scams out of the news. Google News should show you any issues the company may have had.
How to spot the skunk
Some behaviors are alarming and should be reported immediately. This is an example:
- Lenders may pressure you to take out a loan.
- It is impossible to find information online about them.
- They’ll approve you, regardless of credit history.
- They demand an upfront payment.
- They contact them via phone, email or text to ask if you’d like to borrow the money.
- They contact you even after your answer is no.
- Your state attorney general’s office does not record them.
The bottom line
While there are bad apples, the majority of online personal loans are safe and reliable. If you are careful to spot red flags, and do your research to verify a lender’s legitimacy, you can feel as secure with an online lender as you would with a bank or credit union. Online lenders often offer lower interest rates and terms than traditional lenders. With their flexible lending policies, you could even make more money.
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