Average reading time: 4 minutes
Have you ever applied for online loans? Perhaps you’ve thought of applying but you want to know more about what they are and how to qualify. Regardless of where you may stand, this go-to-guide can provide the important details you need to know before applying for a loan.
What Are Online Loans?
The answer is simple: online loans are any type of loan that can be applied for and approved via an online platform. These types of loans can be personal loans, car loans and even small business loans.
In the digital age we live in, most people have taken to shopping, banking and even working from their computers and smartphones, so it’s no surprise that online loans have become extremely common. Whether on a desktop or mobile device, anyone can access information about various lenders and loans, compare rates, and apply.
In fact, it only takes a matter of minutes for anyone 18 years or older to apply online. More people are choosing to opt for online loans, versus applying for loans in-person, because of the convenience factor.
They eliminate the hassle of filling out stacks of paperwork and allow for people to swiftly and easily get the funding they need.
How Do Online Loans Work?
Online loans are made to be as effortless as possible.
When applying, the process is typically as straightforward as can be, using online forms to guide you through the process.
But sites like LendingArch can make it even easier by filling one fast and easy application, LendingArch can instantly search Canada’s best lenders and show you the best one for you without having to apply at each one individually.
To begin, you may be asked several questions that are used to determine your needs. How much money do you need to borrow? How long will you need to borrow it? What is your annual income?
These questions are standard when applying for any type of loan.
If you applied to each lender yourself, you would have multiple credit hits on your credit file. Each hit makes it harder and harder to get a loan as your score goes down. The benefit with websites like LendingArch, is that they do not do a credit search.
In just a few minutes, you will be able to see your loan qualification results. Then, you can choose what is the best fit for your circumstances. So LendingArch is completely free, no obligation, and has no impact to your credit score.
What Do You Need to Apply?
Just like any other process you may go through — for example, applying for a new job or applying to a university — it is important to be prepared. Although online loans are meant to provide a no-hassle process, you’ll need to have a few things ready to go.
Here are the 4 key items you need to gather before applying for online loans, as well as some information that will be helpful throughout the process.
1) Your Credit Score
A credit score is a number assigned to you, based on how many lines of credit you have open and your repayment habits. A credit score can range from 850 (being the highest) to 300 (being the lowest).
When applying for an online loan it is helpful if you know your credit score, if you do not know your credit score or haven’t checked it in a while, there are many free websites that allow you to track your score. They will also offer tips on how you can improve your score.
2) Your Income
Remember those initial questions mentioned before? This is the part where your income comes into play.
When applying for a loan, your annual income (including any part time work, side hustles or investment income) is a large factor in what you may qualify for. Have this information readily available, along with proof of your income like income tax returns and W2s, to provide via the online platform of your choosing.
3) Who Could Be Your Possible Co-Signer
In some cases, you may not be able to qualify for a loan on your own. You might not have a long enough credit history, no credit established or simply have bad credit.
If any of these are the case, don’t worry.
More often than not, you can still qualify for a loan if you use a co-signer. A co-signer is someone that can sign a loan with you to show that he or she can contribute toward repaying the loan if you are unable to. This is to provide added security to the lender that the loan will be repaid.
Co-signers are a way to vouch for someone and ensure they are able to get the loan they need. Just know that your co-signer will need to have good credit themselves in order to help you qualify for an online loan.
Not everyone will need to have a co-signer but it is important to think about these things ahead of time so that you’re able to prepare in the event that a co-signer is needed.
How Much You Could Contribute to a Down Payment
Sometimes when applying for an online loan, it can be beneficial to provide a down payment.
This can be a small amount of money put toward the loan in order to get a better rate, a larger credit line or qualify for different types of loans. While not everyone needs to do this, only you can know if this is the right option for your financial circumstances or not.
How Online Loans Can Help You
Now that you’ve learned what these loans are, how they work and what to have readily available before you apply, you can make a decision about how you’re going to proceed.
Online loans can help in many life situations, both good and bad, and it is nice to know that they are available within minutes. Whether you are looking to get a new car, prepare for a newborn, celebrate in a big way, pay for unexpected expenses or even get a business loan that will help you start your dream job, online loans are helpful, quick and easy.
If you’re ready to get started with the process, find and apply for your online loans today.