Online Loans

Online loans have fast become the premier method for sourcing personal finance. This expert guide provides some additional information for your perusal.

The advantages of online loans

The Internet has changed, moulded and revolutionised the way in which we manage and indeed live our day-to-day lives. But how has it affected the way in which we shop for loans?

The first and most likely response you'll hear to that question...is greater choice. The Internet has allowed consumers far more choice and freedom with regards to researching their chosen loan and sourcing the best possible deal. Over the last five or so years, numerous different companies have capitalised on this trend, through the offering of financial services comparison sites.

In essence, these sites provide a localised, more specific search of the finance market, in the same way that search engines such as Google trawl the Internet to retrieve relevant information. However, although such sites do offer a commendable service they do not always offer a true comparison of the market, as some providers refuse to appear in their listings. That said, using list based comparison sites, as a means to source online loans is still an extremely useful way to start the research process.

The Internet has also allowed certain loan providers to massively discount the cost of their products, through specific online only deals. For the lender, online loans are considerably less resource heavy than conventional packaging methods with the vast majority of the process being completed with little to no human intervention. The major advantage for the consumer being, that these savings are then coupled into their chosen online loan plan.

The disadvantages of online loans

There are actually very few disadvantages that can be associated to online loans. One of the most common concerns from the UK public usually relates to issues of security and identity theft. It is true to say that a person could quite easily apply for a loan online using someone other than his or her own personal details, as a point of contact for the application. Unfortunately, this type of fraud is quite common and there is very little that can be done, in order to stop a person from committing such acts.

However, one reassuring fact that consumers should be aware of is that other than cause a nuisance to the individual targeted, it is very rarely possible for a loan to complete through an Internet application alone. In 9 out of 10 cases, the online loan application that you submit acts purely as an indication of interest to the broker or lender behind the form, which then catalyses the loan process.

For a loan to complete, the lender will require numerous forms of ID, signed contracts and ultimately proof that the applicant is who he says he is. Without this contact and proof, the online loan process ends before it can begin.

Unfortunately though, some brokers and lenders will perform credit checks at the point of application, as they require little more than a name and address to do so. In this instance, online loan applications can be flawed as numerous searches against your name, can taint your overall credit history. If you feel as though you have been targeted by fraudsters and your credit history has suffered as a result you should do the following: -

• Report the incident to the police
• Contact a credit reference agency such as Experian or Equifax

Once you have established that an online loan application has been fraudulently made, it is then possible to have your credit history corrected through one of the above agencies.

Who are the best online loan providers?

There are many different sites and services online, which are either wholly or partly geared towards providing some form of loan search service. In all fairness the function served by the vast majority of these sites are actually very similar but there are a couple of key features to look out for: -

• Ensure the service is impartial i.e. it does not favour one particular provider and can view the market objectively.
• Before you submit your details, check to see if the site has a privacy policy and conforms to data protection laws.
• If you would prefer not to be credit searched online, check to see if the site intends to carry out a scoring function as part of its service.

It can also be beneficial to have an understanding of certain terminology when applying online for your loan. Common phrases such as APR and PPI can often confuse and even catch out some loan applicants, which can invariably lead to disappointment. If you'd like to brush up on your knowledge of the finance market, make sure you review our helpful glossary.