Online lending services have been around for quite a while; however, as more and more different platforms keep appearing, it is becoming increasingly difficult to determine what type of individuals each one was designed for. Although the government heavily regulates all online platforms that are currently in operation, some have a structure that is vastly different from that of banks, allowing them to offer more flexible deals or to work faster.
{This having been said, as it is with banks, you have to know where to go and what clarifications to ask for, in order to get the best possible deal. Generally speaking, online lending platforms are not difficult to understand. However, you need to understand how each one operates and how it can help you. Here is what you need to know:
- Online Lending Services
Regular online lending services are very similar to banks in terms of their internal structure and the way they operate. They are essentially companies who give out loans and set their own terms and conditions. This freedom allows them to skip certain steps when it comes to processing loan request and to calculate their interest rates differently.
One of the biggest advantages of using these services is the fact that those that apply can get loans in under 24 hours, provided that they meet the requirements needed to expedite the process. It is also important to mention that some platforms do not perform credit rating checks.
Pros
- Can be used to borrow money in under 24 hours;
- Great if you do not have a great credit rating;
- Some loans are not reported to credit registries and will not be noted in your financial records;
- No restrictions on what you do with the money;
Cons
- High-interest rates;
- High processing fees and charges if you do not make the payments on time
- Short terms for the loans;
- P2P Lending Platforms
P2P lending platforms are vastly different from banks in the sense that they do not offer loans. Instead, they help facilitate communication and negotiations between lenders and borrowers. The platform itself only takes a small commission from both parties. As with other online lending websites, most transactions are not reported to credit rating registers.
Pros
- Low-interest rates
- Can be used even if you have a low credit rating
- Most platforms do not perform credit rating checks;
Cons
- Can take a while for your loan request to be processed;
- Low upper limits for the value of the loans;
- Crowdfunding Platforms 150
Crowdfunding is somewhat newer than other types of platforms. They are focused on helping individuals show off their ideas and product concepts so that others might contribute to their financial goals. Once you create an account on a crowdfunding platform, you will get access to a page that you can use to explain how much money you need and what you want to use it for. The page will then be made public so that others may access it and contribute with money. Once you reach your financial objective, the platform will send you the money, and you will be free to start using it.
Pros
- Great for a product or a business idea;
- You can raise huge amounts of money;
- Crowdfunding is not actually a loan and will not impact your financial records;
Cons
- Only good for designing products or services. If users cannot benefit from your idea, they will not back you up;
- You have to give something back to the users that contributed with money;
Conclusion
Each of these three is great in their own right. However, you have to look at where your financing need fits best. For example, if you need to find the money for a new laptop, crowdfunding platforms may not be the best places to get money. Generally speaking, form household or personal needs, the first two options will be better.
