As more and more online lending platforms appear, it can be increasingly difficult to keep track of how the deals that they offer over time. Companies that offer loans and lines of credit through the internet are heavily regulated by the government, which means that, even though they do not function in the same ways as banks do, they are still subjected to the same laws. This makes them extremely safe to use, from a legal point of view. However, they do have more freedom in terms of what terms and conditions they can offer to their clients.
This having been said, it is important to understand what you should look for when choosing an online lending platform to borrow money from. Here is what you need to know:
Choose Only Trusted Platforms
Security is the most important aspect of using an online platform, of any kind. Although most of the ones that are currently up and running are authorised to operate, there are still some who are unsecured and can lead to users disclosing their personal and financial information to malicious parties. Keep in mind that the platforms do not intend this, but their lack of digital security can lead to you losing information that may give others access to your bank accounts.
When choosing an online lending platform, make sure that you check that your internet browser displays a padlock symbol before the website’s address. This will ensure that the platform is encrypted and that third parties will not access your information.
Know What Your Choices Are
There are several types of platforms to choose from, and each of them caters to the needs of different individuals:
- P2P Lending Platforms – These are very different from banks, in terms of structure. They do not give out any loans. However, they do put borrowers and lenders in contact with one another and oversee that the transactions go smoothly. Most P2P websites set relatively low-interest rates and give out small, short-term loans that range between £1,000 and £3,000. The main advantage here is that the loans are cheaper than those from banks, but there are limits to how much you can borrow;
- Online Lending Services – These are essentially the platforms used by real-world lenders to offer their services through the internet. Most offer several types of loans and lines of credit, all of which have terms and conditions that are similar to the ones offered by banks. Online lending platforms do not usually perform credit rating checks and approve small loans in under 24 hours, making them a great choice if you are in a hurry;
- Crowdfunding Platforms – Although they do not offer loans in the traditional sense, they are great ways to find financing for business ideas, especially if you need money to design and manufacture products. The platforms simply host pages that users can use to present their ideas and allow others to contribute to user-set financial goals. Once the goal is reached, the website releases the money to the user;
Sum It Up
Generally speaking, all three types of lending platforms are great ways to borrow money when you need it. Especially when considering the fact that none of them performs credit score checks, however, if you have an emergency and need the money fast, you may want to look for an online lending service that offers next-day loans. Otherwise, it is better to choose a website that offers interest rates that are smaller than those of banks. Regardless of your choice, always make sure that the platform is encrypted and that your personal information will not be vulnerable to cyber-attacks.