You aren’t limited to an ancient banking institution for a quality loan anymore. The internet lending industry has blown up in the recent years, and the competition in this space has spawned some incredible opportunities for borrowers like you. But not all lenders are created equal. While there are always rock solid lenders, like those who lend money to homebuyers, there are plenty of creditors on the web who exist to extract your money from you, as much as possible and as quickly as possible. It can be difficult to distinguish quality lenders from the not-so-quality. That’s why we made this little guide to help you spot the best of the bunch.
- Look for Reputation. Like so many things in life that involve money, it’s important to look for companies that have a solid reputation before borrowing money from them. But when it comes to online lending, it can be difficult to figure out whose reputation is real. Plenty of web lenders work their little hearts out to create fake reviews and user comments. These can be difficult to identify at first, but you can start to catch the language and structure used by fake or biased reviewers. As a counterexample, we’ve included this SoFi review. As you can see, it’s written in natural language, and it’s not 100% positive about every aspect of the lender, as any real review would be.
- Pay Attention to the Terms. In online lending spaces, it’s possible to find lenders who have great websites and support, but don’t actually offer a lot in terms of great loans. A good loan is several things: it gives you the money you need, it doesn’t charge you an exorbitant amount for the process, and it gives you a reasonable amount of time to repay the loan. These are the terms. Pay careful attention to the APR. If it’s too high, you’ll pay far too much over the term of the loan, even if the monthly payment is affordable. Also make sure that the interest is compounded annually, not monthly as is sometimes the case with usurious online lenders.
- Pay Attention to Customer Service. Customer service is key with digital businesses. With a bank loan, you can easily head over to a branch office and sit down with someone to talk about your loan. Not so with online lenders. This shouldn’t be a problem if you’ve paid attention to points 1 and 2. But if you ever really need to talk about someone about your loan, you’ll want a company that is helpful and transparent when it comes to their customer service.
If you follow the above steps, you should be able to find an online lender without too much trouble. There are many to choose from, so take the time to find the terms that best fit your needs and budget. Competition in this space has created a lot of opportunity for consumers like yourself, so you should definitely take advantage of all the options that exist in this rapidly growing market segment. Take the time it takes and you’ll be glad you did.