Why it makes sense to get an online loan
If you've found yourself doing the grocery shopping on the train on the way home from work, booking your annual holiday in bed on a Sunday morning, and organising a birthday party from your desk at lunchtime, then getting a personal loan online is going to make a lot of sense to you.
It used to be that you could only apply for a personal loan in person, but that's no longer the case. Most banks will accept online loan applications and some lenders are 100% online-only or branchless, like peer-to-peer lenders, so you don't have any option other than to turn to your computer or smartphone for getting additional funds to help pay for big ticket expenses.
Not only is it more convenient to apply for a personal loan online, but often online lenders or online loans will have some of the most competitive interest rates and instant approvals. You'll also find that most online personal loans will have many of the same features as a traditional personal loan so you can choose the features you want and the ones you don't.
When you are borrowing money, there are still a range of things that are important to understand about personal loans, whether you apply online or not, so we've detailed them below so that you can get across all the essential must know info and then get straight onto applying for your loan.
Types of personal loans available online
Lenders will have a range of personal loan options available online including car loans, debt consolidation loans and general purpose personal loans. These include loans for more pleasurable reasons for a loan, such as weddings, travel or home renovations. As well medical loans like cosmetic surgery or dental repairs; for more information check out our medical loans guides.
With online loans, you'll have the choice between a secured loan and an unsecured loan. A secured loan is a popular choice for new car loans as it means that you can often get a much cheaper interest rate by securing the loan against the car. If you own your house or have other significant assets you might also be able to get a secured loan for your purchase.
Unsecured loans are usually the most popular type of general purpose loan as these
don't require you to put up any security. The downside is that they usually have a higher rate of interest than secured loans.
Key features of online personal loans
Whether you want the bells and whistles loan or you just want the bare basics,
here are some of the features to consider when doing an online comparison.
- Repayments frequency: With most online loans you'll get to select the repayment frequency to suit you and not the bank's billing cycle. You'll have the option of making weekly, fortnightly or monthly repayments but no matter which option you choose it is a good idea to ensure that you either set up a direct debit from your bank account or you make automated payments via your online banking. You don't want to miss a payment as this could not only cost you a late payment fee, but it will also put a mark against your credit history.
- Extra repayments: If you can reduce the time that it takes to pay back your full loan amount, you should. The money you pay in interest to your online lender would be better off in your pocket than theirs, so having the ability to make extra repayments (no matter how small) is worth it. Just be aware that with some online fixed loans there might be a cap on the amount of extra repayments you can make over the term.
- Redraw facility: With some personal loans you will also have access to a redraw facility which means that if you do make extra repayments along the way, you can redraw it again if you need that money back down the track. Some lenders will charge a fee for this and other might have a minimum redraw amount.