Finding Cheap Online Loans

Writen by John Mussi

Where do you draw the line between cheap online loans and those that are not? How does one make the classification and determine what a cheap online loan is? After all, if it's too cheap, it makes one wonder if the lender is legitimate or perhaps one who is very difficult and must lower interest rates in order to attract customers. You want to be sure that you are really getting a good interest rate and that the lender is not using a lower interest rate to hide other excessive charges.

The Importance of Research

When it comes to borrowing money from a legitimate source, it's important to know the kind of company with whom you are dealing. Several things that you may want to research about lenders you are considering for cheap online loans include the following:

• Interest rate in comparison to industry standard

• Loan fees compared to industry standard

• How interest rate is calculated

• Repayment term

• Prepayment penalty, if applicable

• Late fees and grace period

• Collection practices

• Business demeanour and professionalism

As you can see, it is not simply the interest rate that will guarantee a lender's legitimacy, but the entire package that is offered to the borrower, including that of personal contact. Of course, some items concerning the lender cannot be researched, and must be discovered by speaking with the loan officer on the telephone or with other people who have dealt with the lender in question.

How to determine if the lender's loans are cheap

Contrary to popular belief, not all loans are created equal, and the same holds true for cheap online loans. They may look the same on a website or piece of paper, but when it comes to the contract stage, there may be some differences. For instance, two lenders may charge the same interest rate, the loan charges may differ, and if there is a dramatic difference, it can substantially increase the overall cost of the loan. There should be dramatic difference in interest rates, although there may be a marked difference in rates between what a lender charges someone with good credit and what they charge someone with poor credit. If you find that lenders charge different rates for the same credit score, that is not a concern. Those you want to question are those who deviate a great deal from the industry standard for no obvious reason or who have the same rate for all customers that is not in line with the industry standard. Sometimes the loan may appear cheap, but with all the additional charges, if calculated as interest, the loan may exceed that of another lender.

Exercise caution

Do not assume that if a lender is substantially higher or lower than other lenders in the same category that it automatically means they are not legitimate. What this means is that it is a caution that you should do more research and make sure the lender is legitimate and you will not be defrauded if you decide to conduct business with the lender. Of course, if you are doing business locally and know the lender's reputation, research is not as important as with those with whom you come into contact online. Much more research is necessary when it comes to cheap online loans than what is needed when you deal with a local lender.

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About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.