Guaranteed personal loans online with instant approval are easy to get now with more choices to choose from. While that’s a clear advantage for borrowers, there are disadvantages. Drew wants to know more about both the pros and cons.
“Just like millions of Americans today, I’m turning to online personal loans to augment my income. I use this loan to pay for the mortgage when my budget falls short. But are these loans any better or worse than storefront loans?” – Drew, New York City, NY
It depends on your situation. Both loans provide a quick access to cash where otherwise mainstream creditors will turn you down (this is the same situation in the UK and Canada, where short-term loans are popular). To know if this type of loans is for you, let’s spell out both the advantages and disadvantages.
Benefits of guaranteed personal loans online with instant approval
1. Easy access to fast cash
The main advantage of these loans is that it’s fast and easy to secure. A direct lender only asks for your personal and work information and your bank account details. Generally, you just fill up an online application and send it to a direct lender with one press of a key. If you have regular income, you can even get an approval on the same day and the cash transferred to your bank account immediately.
2. Provides an option even for people with bad credit
3. Convenient to secure
The loan process can be completed at the comfort of your house. No more waiting in line and feeling a little embarrassed when passersby see you. With online loans nobody will know that you take out a loan except you and the direct lender.
Disadvantages of guaranteed personal loans online with instant approval
1. High interest and fees
The consequence of getting guaranteed approval loans without a credit check is getting a high interest rate and fees. This is one way a direct lender lowers his risk of losing money when you default. Because of these astronomical fees—the interest is regulated with a cap by the state—online personal loans are best used for emergencies when you have no choice but to secure cash fast.
2. Your giving out personal information online
If you’re wary of giving away personal information over the Internet, you may find online loans uncomfortable. You’ll be asked to submit your full name, address, work background and other personal data to get the loan. Nevertheless, lenders today use encrypted technology that protects your data from being hacked. Think of it this way—if you’re okay buying from Amazon or Apple Store where you provide the same personal information, the hacking concern may not be as serious as you’ve imagined.
3. Risk of debt trap
Because guaranteed personal loans online with instant approval are easy to secure even for people with bad credit, you may find yourself taking out more than what you need. This can easily lead to recurring loans to pay for your previous loans. The result is you end up paying for as much as three times the principal. A Pew Charitable Trusts 2012 report indicates that borrowers are indebted for an average of five months when in fact these loans should be repaid in just two weeks.
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