Are you now in a situation where you need to ask for a loan, but you don’t know what is the best option for you?
Traditionally, to apply for a loan, the most common thing was to go to your bank. In fact, many users still think today that this is the only way to request financing, and mistakenly believing that the bank where you have your bank account is the one that offers the best conditions.
However, this is not entirely true and, in addition to being able to apply for loans without changing banks, you also have the possibility to apply for a loan online, without leaving home.
From Bankate we want to help you choose the best credits for you. Therefore, we have created a guide with everything you need to know about both types of loan, you can find it below.
In the following sections, we will show you the main differences between applying for an online loan and applying for a bank loan, also describing its advantages and disadvantages to help you determine which one is most relevant to you and your needs.
What are online loans?
As the name implies, an online loan is a financing of a certain amount that is requested entirely through the Internet.
This means that the entire application process is done in a computerized manner, so it is not necessary to physically go to the bank branch or make uncomfortable calls.
To apply for a loan online, the user must only fill out a form with their personal data, desired amount and duration on the website of the lender.
During the loan application process, online entities use an automatic verification system, which guarantees the simplicity and speed of online loans, because due to this it is not necessary to present a large amount of documentation, as is the case with bank loans.
These computer programs allow you to verify the identity of the user in just a few seconds, as well as perform a solvency assessment based on your monthly income, and assigning based on a default risk factor that will determine, later, the interest payable.
One of the main advantages of using these systems is that the response time is immediate, which you will know if the loan you have requested has been granted within minutes after submitting your application.
Generally, you can have the money in mind the same day that the application is approved, so it represents a good option for those who need money urgently.
However, there are many more advantages associated with online loans. We detail them below:
- You can apply for a loan without leaving home, 7 days a week
- It is not necessary to present a large amount of documentation, it will be valid with the DNI
- The requirements of online loans are less strict than those of banks
- It is possible to have the money on the same day of loan approval
- You should not justify what you need the money for or answer awkward questions
What are bank loans?
A bank loan is a loan granted through what we know as conventional banking entities, that is, physical and traditional banking entities.
Although currently some conventional banks offer the possibility of submitting your loan application online, the process is not carried out completely electronically, since after that it will be mandatory to attend a meeting at the bank with the Financial advisor assigned to you in order to assess your economic situation.
For this reason, the time invested in applying for a bank loan is generally a bit longer, consuming a lot of your time in meetings, calls, and presenting all the paperwork necessary for your loan to be granted.
In addition to this, the response to your request will take much longer to arrive compared to an online loan, as your bank will conduct a thorough study of your creditworthiness to ensure that there is no risk of default.
Finally, in most cases the bank will ask you questions regarding the purpose of the money, which means that you must justify what you need that amount for.
However, the main advantage of bank loans is that they generally have lower interest when granting long-term loans.
How to decide whether to apply for an online loan or a bank loan?
The relevance of applying for an online loan or a bank loan will depend on your economic and personal situation.
An online loan will be more relevant to you if you need the money with some urgency, you want to ask for a small amount or you don’t have a good credit history, since the requirements are less strict.
As for a bank loan, it is usually a better idea if you want a very long-term loan, have a good credit history and can justify the purpose, such as buying a vehicle.
Is it safe to apply for a loan online?
If you decide to apply for a loan online instead of a bank loan due to your personal situation, you will wonder if it is really safe to do it online.
The answer is yes. Internet security has undergone a radical change in the last decade, in some cases becoming more secure than even an ATM.
Today, more and more people use the internet daily and one of those activities is to apply for loans online. Many people see it as an advantage by not having to wait for queues, to be able to do so at any time of the day and at any time and also due to the application process.
As mentioned before, physical banks tend to ask for more information, more paperwork, etc. while online, that paperwork is somewhat smaller.