Compare Online Loans

Online Loans

Online loans are loans for a small amount of money requested online and granted quickly. Many lenders say you’ll receive the funds in your account in 24 hours or less. This type of loan often requires a minimum amount of documents and you don’t have to disclose what you’ll use the money for. 

Pros and cons of online loans

Requesting online loans has some benefits like the following:

• It’s convenient, as you can request them anywhere, any time

• You can receive the money in just hours

• It requires minimal paperwork

• It’s available for those who don’t qualify for personal loans

In general, online loans are great for situations where you need a little money to cover an unexpected expense or emergency.

However, there are a few disadvantages that are important to consider:

• The interest rate tends to be higher than for other loans

• The time you have to repay is shorter than for other loans

• It’s easy to acquire too much debt that is difficult to repay

• Your credit score can be negatively affected by the debts

In this area, it’s also important to be aware of the risks of online loans: scams, predatory lending, and unethical debt collection. 

A scam might be when a lender requests the payment of a small fee to grant the loan. In most cases, after you pay the fee, they disappear. Predatory lending is when lenders take advantage of people’s needs by granting loans with abusively high interest rates. Finally, unethical debt collection is methods like threats and harassment to scare people into paying the debt.

To avoid these risks, you should resist the temptation of easy money and stop to consider the reputation of the lender before you make a request. Look for the company online and check the opinions and experiences of other clients before choosing a lender. You should only borrow from credible lenders with a good reputation. In Credilemon we are committed to only providing information about reputable and responsible lenders, and letting people know about scams or other risks as we encounter them.

Requirements to request an online loan

Online loans don’t have many requirements. You will need to be of legal age –usually 18, though some lenders require you to be 21– and be a resident of the Philippines. Beyond providing a valid ID and taking a selfie to validate your identity, there isn’t much paperwork you need to submit. 

However, when a lender asks for information regarding your monthly income, that is a sign of responsible lending. In the case of online loans, they might only require you to input a number in the form, instead of asking you to submit a document. 

How to choose an online loan

You need to make sure you can repay the loan. This is super important to avoid raking up too much debt and impacting your well-being. First, consider how much money you need. In the case of online loans, this is likely a small number that at first glance shouldn’t be too hard to repay, but don’t assume so just yet. Then, look at your monthly income and subtract your fixed expenses (rent, groceries, transportation, public services, etc.). The number that results from that subtraction is what you have available to repay the loan.

Now, you need to look at the interest rate and the repayment term of the online loan. The lower the interest rate and the longer the repayment term, the better. With that in mind, you need to calculate the real cost of the loan, the amount you requested + the interest rate you’d accumulate in the term of repayment. If you need help with this, you can use a loan calculator online.

For example, say you request 10,000 pesos with a 40% interest rate and you have 90 days to repay. In that case, by the end of the 90 days, you would have to pay 14,000 pesos in total. The money you have available to repay the loan in 3 months needs to be equal to or higher than those 14,000 pesos. If it is, then you’ll be able to repay the loan with no problem and can proceed to request it. 

In the step of interest rates and repayment terms, you can look at many different online loans and compare them to choose the one with the best conditions for you. This is also a good time to check the reputation of the lenders to make sure they are credible as we mentioned before. In Credilemon we have a list of lenders and online loans you can look at to choose the best.

After you request the loan and it’s granted, you should receive a contract with information about the loan that you have to sign to receive the money. Carefully read the entire document before you sign it and look for any discrepancies between the information they advertise and what the contract shows. If everything looks good and you sign, make sure to take note of due dates for payments, so you can avoid being late.