Many financial institutions now offer you the option of applying for a loan online, making the process faster and easier for the consumer. But some people are still worried about making such applications online. Fear not. We’ve come up with 10 tips to help you safely find a loan online.
If you have a bad credit score, then it's highly unlikely that you will get a loan. Get your credit score first and see where you can improve.
1. Decide your needs
Before you start looking for loan providers online, you need to decide what you need and what your priorities are. For example, do you need a large, long-term loan that you will pay off monthly for a big purchase?
Ask yourself if the purchase is really necessary and if you can afford to pay it off. Otherwise, you might want a short-term loan to tide you over until payday. When you’re looking online, you’ll notice that lenders have their own rules about how much you can borrow, and over what length of time.
2. Google it
That’s right. Just Google ‘micro-lenders’ or ‘loan’, and you’ll come up with many willing lenders. But there’s more to it than that. As you might have guessed, you are entering a bit of a minefield with all the options out there. That’s why our third tip is so important.
3. Ensure they have the right credentials
In South Africa, all legitimate micro-lenders are required to be registered with the National Credit Regulator.
So, if you find a lender who is registered with the body, you can rest assured that they are reputable lenders whose interest rates and fees are regulated. The lender should have the NCR badge on their website, or proof that they are registered such as an NCR registration number.
4. Check they’re legit
If the website does not contain the lender’s contact details, move on. A lack of telephone numbers and email addresses is cause for alarm. Apart from the fact that a lack of these details on a site makes the lender look disreputable, what if you want to follow up on your loan application or speak to someone for help?
If a site does list a telephone number, it would be as well to make a test call to ensure that the organisation is genuine.
5. Don’t pay upfront
Never agree to pay a fee before you are able to apply for a loan. That is a rip-off tactic whereby con artists make a buck. You’re bound to lose your hard-earned money when you never hear from them again.
6. Fix it
Make sure the lender you are considering offers fixed interest rates and instalments. Some micro-lenders don’t, and you can end up with a horrible surprise when your instalments suddenly increase beyond your budget.
If there is a review or comments section on the site, read it carefully to pinpoint any problems in regard to these issues. A simple website is a good sign. It means there’s less likelihood of hidden clauses that trap you with legal-speak.
7. Timing is everything
Timing is crucial to securing the type of loan you want. For this reason, it’s essential to read the fine print before committing to a loan. If you’re looking for money urgently, you certainly don’t want to have to put up with delays before receiving your money. Some lenders require recipients to ways for days or even weeks before their loan comes through.
8. Be honest
If you have a poor credit record, it’s essential to be honest on your loan application. With technology, it’s impossible to hide these things, so it’s best to be straight about it upfront. If you aren’t, the lender might decline your application.
9. Keep up to date
When your loan has been approved, always keep the lender up to date with new contact details so that you always receive relevant correspondence.
10. Form a partnership
Form a partnership with your lender with a view to further co-operation.
What you can do right now to reduce your debt
If you have become over-indebted, you need to start practising good spending habits. Consider every expenditure on whether or not it is necessary and vital. Is that early morning takeaway coffee really worth the money?
Or that muffin to go with it? You might be very surprised at how much these seemingly minor expenses add up to. Breaking small habits like this isn’t difficult. You can bring your own coffee and muffins, and save yourself a small fortune over time. Practice good financial habits, and you’ll save yourself a world of misery.