There comes a time when borrowing money becomes essential. Whether it’s to meet a sudden financial emergency or to pay off impending credit card debt, there are various reasons to borrow money.
Borrowing money is not just for meeting with exigencies, but also for improving your quality of life, such as a study loan or a personal loan for home improvement. While it is normal to think about taking out a loan from friends and family, its not nice to think that they would have to take money out of their savings to support you during a difficult financial period.
In such situations, financial lenders can help you get out of a sticky financial predicament. They lend you the amount based on your application, credit history and financial standing. Finding the right online lender is a vital step in the money-borrowing process, but with so many institutions out there, how do you even begin?
The process can be stressful and daunting for those who are lending money for the first time. The first step is to start shopping around before identifying the ideal mortgage lender for meeting your needs. Borrowers who browse and compare the details and offers of three online lenders or more are bound to make a more informed decision than borrowers who pick the first lender they come across.
If you’re considering borrowing money from an online lender and don’t know where to start, this article offers 5 strategic tips for choosing the right online lender for you.
Regulated Lender
During the process of comparing details and offers from multiple lenders, ensure to check whether the shortlisted lender is authorised and regulated by a recognised body in the UK. For example, Salad Money and its open-banking process is regulated and authorised by the Financial Conduct Authority (FCA), an independent financial regulatory body. Approval from a recognised financial body adds to the lender’s reputation.
You may want to skip a lender that is not recognised by a regulatory body in the UK. Borrowing money from unregulated lenders can get you into hot water and potentially harm your credit scores.
Quick and Easy Application Processing
The traditional process of lending money involves a lot of paperwork and takes a lot of time. You don’t want to be dealing with winding processes and time-consuming paperwork when you have time-sensitive money needs. Lenders that keep the application process simple, transparent, and quick should take precedence over the rest.
For meeting situations like emergencies that are time-sensitive and urgent, understand how soon the borrowed amount can be disbursed into your account for use.Give lenders who are quick to disburse money more precedence over the other lenders.
Low Rates of Interest
Interest rates are competitive among traditional lenders like banks and mortgage brokers, even so with online lenders. Whether you are comparing the online direct lender or a mortgage broker, look for the best rate of interest on your borrowed amount to avoid paying more than you need to.
However, be sure to read the fine print on the interest rates carefully to avoid unexpected surprises in the form of processing fees and pre-payment charges. Pick an online lender that is transparent in its dealings with loans and mortgages, whether it’s for the short term or long term.
Reliable Customer Service
You may want to steer clear of lenders with poor customer service records. A peek into the reviews from existing and previous customers gives you a better understanding of how they go about their services. Some questions you may want to consider:
- Do they have a support team in place?
- Are they prompt at answering any questions?
- Are they quick to resolve problems?
- Do they have a lot of bad reviews?
Getting the answers to these questions gives you enough information of how online lenders interact and support borrowers before, during and after the lending process.
Flexible Payment and Repayment Terms
Any surplus income or savings used to make part prepayments towards your borrowed amount can lower your interest and liability. However, some lenders are quite stringent in terms of prematurely paying your loan amount.
Additionally, it’s good to gain additional flexibility in terms of loan repayment. Depending on the borrowed amount, you may want a longer repayment period. Short repayment durations can be stressful to meet and fulfil, so choose a lender that offers flexibility and convenience in payment and repayment terms.
In Conclusion
Choosing the right online lender can be a game-changer for your money-borrowing needs. Regulatory approvals, ease of application processing, faster disbursal process, lower interest rates, dependable customer service, and convenient terms of payment and repayment are some of the key factors to consider when comparing online lenders for your needs.
With these top tips, you can make an informed decision about the right online lender.
