Since the start of lockdown caused by the Coronavirus pandemic last March, the global economy has been negatively impacted. Several businesses, especially small businesses, were forced to shut down and employees were dismissed and now remain unemployed. Canada’s unemployment rate alone soared up to 13.7% in May this year — an all time high for the country. These put millions of citizens in a rough financial situation, especially now that movement in public spaces are still restricted and job opportunities are limited.

With all these financial dilemmas, a lot of people are left with no other choice but to apply for loans. And for most who are still not able to build their credit scores, they opt for payday loans no credit check. The good thing is, these types of short-term loans are actually the most convenient at this time since they could be easily applied to online — no risks of going out in public. However, since this is pretty much an uncharted territory to most, you might hesitate if it is a safe choice. To help you, we are breaking down one by one everything you need to know about online loans as well as give you its pros and cons to help you in deciding if this is the best choice for you.

Online Loans 

There is no shock that every year, since the internet was invented, a lot has been shifting to online platforms. This is to bring better convenience and ease to customers and clients as well as widen the reach of services. Online loans are one of these digital developments.  

Most online loans are short-term and offer limited amounts of money compared to traditional loans from banks. Online lending services allow clients to apply on their website. The client has to fill out a form that can be accomplished in a couple of minutes and will then be submitted. The form can be received by the lender on their end almost instantly which makes the process be done in just a couple of hours. There are lending services that help applicants by sending out their applications to multiple lenders. This increases their chance of getting approved higher than it already is.  It can even help when you are looking for Refinansiering av lån.

Qualifications

Qualifications and requirements differ depending on your country, lender, as well as the type of short-term online loan you are applying for. But, here are the most common qualifications and supporting documents a applicant has to possess to qualify for an online loan in Canada:

• A Canadian citizen – the applicant must be able to present a citizenship card or certification of citizenship
• At least 18 years old – a government-issued identification card is required to show proof that the applicant is of legal age
•  Employed or has a stable source of income – present certificate of employment or any document that proves you have been receiving steady income for the last couple of months
• Checking account

Pros and Cons of Online Loans  

Pros 

1. You apply online

Applying for online loans can be done on the comfort of your own couch at home. You do not need to travel so far anymore and spend most of your time waiting in line. As long as you have a device and an internet connection, you can apply and get approved almost instantly.

2. Faster application process

Unlike traditional loans where you have to wait for several days up to a couple of weeks to know the results, your online can be done and approved in one day. Filling out the application form takes a couple of minutes and once you have sent it out, results if you are approved or not can be released the same day.

3. High approval rate

Approval rates for online loans like payday loans or instalment loans are higher than traditional ones you apply for in banks. With lesser requirements and qualifications, you can easily get approved.

4. No credit check

Most lenders who offer short-term online loans do not look into your credit score, so, even with a bad credit, you can be granted with a loan. All you need to do is present your employment certificate or document that proves you have steady income. This alone will ensure the lending company that you are capable of paying back the loan.

5. Perfect for fast cash

With the shorter and faster application process, online loans are perfect for those in need of a small amount of cash as soon as possible.

6. Fewer requirements

Usually, banks requirement several bank statements and financial documents to consider you for traditional loans. In online loans, requirements are fewer and are easier to get a hold of.

7. Fewer risks of contracting the virus

Now that you do not have to leave your home to apply for a loan, you do not have to risk going in public and potentially contract the virus.

Cons

1. Online loans are short term

Short term loans have to be paid back in just a couple of weeks to a month. Payday loans, for example, are expected to be repaid on or before the next payday of the borrower. Before applying for online loans, make sure that you are able to pay it on time, otherwise the interest gets higher.

2. The amount you can loan is limited

The amount of money you can borrow from online loans are only limited. In Canada for example, no credit check online loans only offer $100 to $1500.

3. Higher costs

Unfortunately, the interest rates, fees, and charges, for short-term online loans are known to be really high, especially if you compare them with traditional loans.

4. The website may be unsafe

Another risk you have to take when applying online is the uncertainty if the lender’s website is unsafe. Unsecured lending websites are prone to identity theft which can extract your private information.

5. Not accessible to everyone

Online loans are not suitable for those who do not have the access to the internet. 

6. Loan scam risks

Lastly, online loans scams have become a modus operandi of some frauds and criminals — scamming loan applicants by asking them hundred of dollars beforehand for processing fees and other charges they can think of.

Applying for online loans is definitely a risk, however, with the right research and acquiring enough knowledge, you will be able to find a reputable lender and achieve a successful transaction. Although you are already desperate to get a loan as soon as possible, remember that it is important to ensure you are dealing with legit lenders and lending companies. This is to avoid you from getting victimized by loan scams which may leave you less money than you originally have. This will make you realize how a bit of a research is 100% worth it in the end.