3 Useful Types of Online Lending Platforms

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:

  1. 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.

Online lending services can be a great help for those in need of short term cash.


  • 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;


  • 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.


  • Low-interest rates
  • Can be used even if you have a low credit rating
  • Most platforms do not perform credit rating checks;


  • 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.


  • 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;


  • 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;


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.

How to Apply for a Personal Loan: A Step-by-Step Guide?

People that need cash to cover for an urgent financial expense take a personal loan. A personal loan is an amount of money that you borrow from a bank, a credit union or other lenders that you have to repay in fixed monthly payments or instalments for two to seven years, including interest. In the UK, taking a personal loan is easy and quick because other lenders require few documents. However, if you are planning to borrow a significant amount at the lowest possible interest rate and the best payment terms, following these steps would help you avail of the best deals when applying for a personal loan.

Step 1. Determine How Much to Borrow

When you take a loan, make sure that the amount is enough to cover the amount that you need. Applying for a small amount cannot resolve your problem. However, do not borrow more than what you need and can afford to repay to avoid future financial problems. Calculate the amount that you must pay every month to have an idea of whether you can afford the loan or not.

Step 2. Find the Right Type of Personal Loan

Personal loans may be a medical loan, secured personal loan, debt consolidation loan, and unsecured personal loan. Undergoing dental or medical procedures can be costly. However, there are lending companies that offer medical loans.

A debt consolidation loan intends to roll into one all your debts so that you would have to pay a single lender instead of multiple ones. Lenders could lend you money enough to pay all your debts.

Borrowers that need a significant amount of money and have a property to use as collateral may apply for a secured personal loan. At the same time, if they do not own anything of value, they can opt for an unsecured personal loan.

Step 3. Decide from Whom to Borrow

Banks and credit unions offer low-interest rates. Nevertheless, they might require several documents and might take time to process your loan. Quick loans could be costly, but if you need cash immediately, you can find many lenders that would release the funds a few hours after approving your loan application.

Step 4. Know Your Credit Score

Banks and credit unions might be particular with the borrower’s credit score. If you have a high credit score, you could take a loan from a bank, where you could get a loan for a lower interest rate. For those with low credit rating, applying to borrow money from lending companies that do not consider credit rating as a prerequisite for a loan would be advisable.

Step 5. Check the Lender’s Requirements

Learn the requirements of the lender. Applying without the complete set of documents would be a waste of time. Banks and other traditional lenders might ask for your credit score, annual income, debt to income ratio, and credit history. Borrowers that cannot submit one of these documents have to look for credit companies that do not require these papers.

Step 6. Gather All Documents

Have all the documents on hand before sending your application. Lenders that do not require credit history would ask for a government-issued ID, bank statement, employment certificate, Social Security number, and the contact details of your employer.

Step 7. Submit for Preapproval

After you have gathered all the documents, you can submit your loan application for preapproval. The lender will give you the calculated loan amount, interest rate, and repayment schedule. Since the estimates are not yet final, you can make a comparison with other lenders that have preapproved your loan.

Make sure to follow these steps when seeking a loan for an easy and quick approval. Making comparisons of several lenders would let you find the best deal for you.

What Banks Look for When Deciding If You Should Get a Loan?

The main reason why most individuals who are looking to borrow money from banks get high-interest rates and disadvantageous terms and conditions is the fact that they have a low credit rating. This can be either due to a very short history in terms of using banks’ services or as a result of not repaying loans on time. Unfortunately, most people come to the conclusion that their credit score is too low for a particular type of loan only after they apply for it.

Building up your credit rating takes time due to the fact that it is the result of a complex algorithm composed of factors that describe your financial behaviour. However, most lenders do not look at the whole credit rating equation. In most cases, they will only look at three components when establishing what interest rate, terms and conditions you should get on a loan. Here what you need to keep in mind when it comes to your credit rating:

  1. Pay Attention to Your Credit Utilisation Ratio

Your credit utilisation ratio is one of the first things that lenders will look at when deciding if you are eligible or not for a loan. This ratio is calculated by looking at the amount of money that you are using from what you have access to through your credit card. For example, if you have a £5,000 limit on your credit card and have used it to purchase furniture worth £2,500, then you will have used 50% of your available credit. In most cases, if this ratio is over 30%, then lenders may draw the conclusion that you are unable to properly manage your income and may offer harsher terms and conditions for their loans.

  • Do Your Best to Always Make All Payments On Time

The single most important element of your credit rating is your reputation. Individuals who are always late with their monthly payments on their loans, regardless if they are repaying a personal loan or a mortgage, maybe offered higher interest rates than normal. Please keep in mind that those who have missed several consecutive payments or have taken out a secured loan and have ended up losing their collateral to the bank may be refused their request to take out a loan altogether.

If you are ever unable to make a monthly payment or the cost of a loan becomes too great to handle, go to the lender and explain the situation. In most cases, the banks will agree to work with you in either to make it easier to repay the money. This can be done either by refinancing the loan or through debt consolidation.

  • Do Not Send Too Nany Applications in a Short Amount of Time

Every loan request that you send out to a lender is usually attached to your financial history. Sending a larger number of loan applications in a short amount of time (a practice that is usually meant to give individuals information of how large the monthly repayments would be) will have a negative impact on your credit rating. Lenders will usually presume that the reason behind a large number of applications is your insecurity when it comes to handling your personal finances.

To Conclude

Banks generally look at how you handle your finances and at how you’ve repaid your pas loans. In other words, use your credit cards sparingly, make your monthly repayments on time and, whenever possible, use online loan calculators to determine how much you would have to pay for a particular loan, rather than getting the information through a loan application.

The Easy Way to Quickly Increase Your Credit Rating

At times, you might need to pay for an emergency medical procedure or have a once-in-a-lifetime opportunity that you do not want to miss and need financing. Having to borrow money and realising that your credit rating limits the amount of money that you can get or the cost of the loan can be problematic. Unfortunately, your credit score is calculated using indicators that show your ability to handle your personal finances in the long term. As a result, it can be difficult to increase in a short amount of time.

This having been said, there are a few things that you can do to quickly boost your credit rating up to the point where you will get a better interest rate and, possibly, better overall terms and conditions. As a word of warning, please keep in mind that each of the following tips can help increase your credit score, however, they should all be used at the same time to get results that will have a considerable impact on the cost of your loan.

  1. Consolidating Your Debt Can Go a Long Way

Debt consolidation is one of the best ways to quickly increase your credit score. By taking out a larger loan that you can use to repay several, smaller forms of debt, you will not only make it easier to keep track of your monthly repayments but also increase your credit rating.

Keep in mind that when taking out a debt consolidation loan, part of it should go towards paying off your credit cards. This will reduce your credit utilisation ratio.

Generally speaking, your credit utilisation ratio refers to how much money you are using out of the sum that you’ve been given access through a credit card. For example, if you have a credit card with a £5,000 limit attached to it and you have used it to pay for £2,500 worth of products or services, then your credit utilisation ratio will be 50%. This can reduce your credit rating because it will signal lenders that you need the extra financial wiggle room in order to pay for your expenses.

By using a debt consolidation loan, you will be able to both pay off your credit cards and also repay most, if not all, of your smaller loans such as payday advances and some unsecured personal loans.

  • Consider Using Online Lending Services As a Credit Card Alternative

If you are going through a period of financial instability and need money prior to applying for a loan, consider using an online service to borrow what you need. These services do not perform credit rating checks and do not report smaller loans to national credit registers, which means that the transactions will not be part of your financial history.

  • Refinance Your Costly Loans

Although it may not seem important, especially in the grand scheme of things, the cost of your current loans will have a big impact on your credit rating. This is due to the fact that most lenders will look at your income and then at the monthly repayments that you have to make. If the monthly repayments eat up too much of your monthly income, lenders will likely ask for collateral to give you a loan or refuse your request altogether.

If you have expensive outstanding loans, consider refinancing them. In the case that you have managed to consolidate most of your debt and are only left with one, larger loan that you have to pay, consolidating it will further increase your chances of getting great terms and conditions for future deals.

Use All Methods for the Best Credit Rating Increase

All of these options can be used at the same time, and most can be applied shortly before requesting a loan. It usually only takes one week to get a debt consolidation debt or to refinance a loan, and in the meanwhile, you can use online services in case you urgently need money.

How to Choose the Best Online Lending Platform for Your Needs?

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.