People in Canada will probably find themselves experiencing a shortage of cash when bridging a funding gap at some point in their lives. And, with the current situation, this might be your case, especially if your job or business has been hit by the coronavirus crisis.
It’s where loans come in handy. In the past, most Canadians would opt for car title loans with banks and other financial institutions. The good news is that gone are those days when borrowing and lending money could only take place physically at banks, a process that’s loaded with fussy and tiring procedures. It’s no wonder why financial shortages were considered as weary situations a few years back. Thanks to technology and its continued advancement, the times have already taken a turn.
The lending and borrowing process has become quick and easy through online lenders. From car title loans to car title loan alternatives, Canadians can now easily avail them without any extra efforts.
What’s An Online Loan?
So, what exactly is an online loan? Well, it’s a cash loan, and one can apply for it through the Internet, just like its name implies. That being said, you can quickly apply online, and there’s no need for you to leave your home or office just to physically visit a bank. The lender and the borrower exchange communication and information online to complete the entire application process.
Online loans are quick, convenient, stress-free, and hassle-free.
How Do Online Loans And Bank Loans Differ From Each Other?
Online loans and bank loans are different from each other in a number of ways. Online lenders allow you to apply for a loan at the comfort of your home. You can even apply while you’re in the office. Basically, you can apply anywhere so long as you’re connected to the Internet. On the other hand, with banks, you have to drive to a local branch to process your application.
The shorter process is what makes online loans unique. Some online lenders are able to approve a loan application within a few minutes and fund it within a few days, in some cases, within 24 hours or the same day the borrower applied for it.
Compared to bank loans, the required documentations for online loans are also typically fewer. Also, online loan companies may offer loans for people with low credit scores because of their competition with other online lenders (there are so many different companies that offer online loans not only in Canada, but around the world today). As you might know, bank loans require strong credit scores, and if you’re a business owner, they require a minimum number of years that your business has been operating for your application to be approved.
How Do Online Loans And Alternative Loans Differ From Each Other?
People interchangeably use the terms online loans and alternative loans often. Are there any differences between them?
A loan is considered an alternative loan if it’s obtained from other sources instead of a bank. While many alternative lenders offer online loan options, not all of them do. One example of an alternative loan is a loan obtained from a credit union. A loan that you take out from a microlender is an alternative loan, too.
The difference between online loan companies and credit unions and microlenders is that, in many cases, borrowers will still have to apply over the phone or pay an in-person visit even if some of the latter may have an existing online application process. Of course, the alternative loan isn’t purely an online loan in this example.
While there are people who still don’t trust online lenders as much as banks and other financial institutions with storefronts, many Canadians are turning to online loan companies for car title loan alternatives because of the following reasons:
The convenience of borrowing money from online lenders is one of the best things about online loans. One can get the funding for any situation while sitting at home in their pajamas or lying in front of their television, watching their favorite Netflix series. You can get the money solely by having a mobile in your hand and an Internet connection. You can browse through the available loan deals, and once you’ve decided which is the best for you, you can get the money you need almost instantly.
- Increased Borrowing Limit
Compared to banks and other alternative lenders, online loan companies often offer a higher borrowing limit.
Because the loans offered by banks and other alternative lenders are tied to some credit limit, the amount of money you can access is usually lower. On the other hand, your loan won’t typically be restricted by a credit limit when opting for online lenders.
When taking out a loan from sources other than online lenders, how much you can loan depends on the decision of the bank, credit union, or microlender. Of course, your debt-to-income ratio, possible delinquencies, employment history, income, historical payment performance, and credit score will also affect how much you can borrow.
To cover your capital expenditures when you’re borrowing money for your business, you’d need a higher amount for your loan. Often, online loan companies can provide you that.
- Good Option For Urgent Requirements
What would you preferably do when you have an urgent requirement and you need money in your bank account desperately? Would you be willing to stand in those tiring queues just to get the funds you need or make life easier for yourself by applying to the loans available online? Most Canadians prefer the latter option. When situations where you urgently require money to bridge the financial gap enter your life even without prior notice, online lenders are more appropriate options to help you solve your problems.
- There’s Usually No Need For Collateral
Another huge advantage of taking online loans that Canadians love is the fact that collateral is rarely required. That means if ever you don’t have other options but to default on your loan, you don’t have to worry about the bank or alternative lender taking your heirlooms, vehicle, or house.
Also, since documenting collateral when taking out a loan can be troublesome and time-consuming, online lenders not requiring collateral most of the time lift the documentation burden from your shoulders.
Additionally, you don’t have to shoulder the costs associated with putting up vehicles, property, land, or other similar things for collateral. Yes, costs can come up with putting something up for collateral when taking out a loan. With land, for example, the land title must have an annotation affixed to it, and it will cost you fees. Note that you’ll also need to work with a lawyer and that’s another cost you have to shoulder right there.
That’s why Canadians opt for online loans instead because they want to avoid having to put collateral up.
- More Flexible Repayment Terms
Compared to banks and alternative lenders, the repayment terms offered by online loan companies are longer, which can last around two to five years. That’s because online loans are really designed to be flexible.
Canadians can make smaller installments regularly with longer repayment terms. It’s a lot easier than repaying loans with a shorter term. Of course, it will also give borrowers flexibility in planning out their expenses and recover the funds they’ve deployed from online loan proceeds.
Depending on your preference, tweaking the repayment schedule is also possible. That’s so much flexibility you’ll get there. For example, you can request to get a repayment scheme that’s sculpted to fit your cash outflows and inflows, especially if you’re a business owner. That’s better and handier compared to having to make equal amortizations on principal payments.
Simply saying, the flexibility of online loans allows you to decide how you’re going to pay for your loan depending on your expense and income streams.
- Faster Processing Time
The usual complaint that Canadians have with traditional banks is the processing time. Traditional banks often take quite a while to process loan applications. The whole approval process alone can even sometimes last a few weeks. Fortunately, online cash loans have solved this bottleneck.
Speedy application approval and releasing of funds are popular benefits of online loans. Online lenders require a simple application process, so approval is faster.
Online loan companies also ask borrowers to provide less documentation. Documentary requirements are only the basic ones, including income, address, and proof of identity. Those are very simple and easy to prepare. No wonder why it only roughly takes 15 to 20 minutes for the application process to be completed on your end.
It only takes hours for the whole approval process to be completed on the lender’s end. The loan proceeds will then be deposited to your account automatically on the next business day, sometimes just on the same day your loan was approved. That means that even in collecting your loan, there’s no need to go to the nearest physical branch of a bank.
With the simultaneous, constant change in the environment and the lives of people, majority don’t have the time to apply for loans in a traditional manner. Therefore, with the pace of time, taking out a loan through online loan companies is gaining importance and fame not only among people living in Canada, but also in other parts of the world.