Hey there. If you have already checked our list of tested cash loans, you may find out that most of the online lenders are charging high interest for short-term loans.
So, now, I am going to talk about the pros and cons of online personal loans, but my FOCUS are not the ones offered by banks and other reputable lenders — but the ones offered by some online lending companies with the aid of their mobile apps.
So, what’s the catch?
Just like what I have tackled with my tested fast cash loans, in order to apply for a loan, you need an internet connection and a smartphone. That’s it. As long as the version of the app is compatible with your device, you can start with the 5-10 minute process.
Cash loans online pros (advantages)
- No credit check — it doesn’t matter if you have a bad credit score in the past because most of these lenders won’t perform a credit check. The approval is based on the information submitted on the app during the application.
- Instant approval or disapproval — you are not going to wait for days or weeks for the decision of your application. Some apps are fully automated — based on the information submitted, it can determine whether you are approved for a certain amount or not. Likewise, some lenders require a verification call — but expect a call within 24 hours (as long as you do not apply during the weekends — no office).
- No paperwork — you don’t have to produce hard copies of your legal credentials. As I have mentioned earlier, you only need wifi or internet and a smartphone.
- Valid ID is enough — it will not ask for many things to verify your identity. It only needs a copy of your valid ID. I know that some of our folks here do not possess several IDs, some of them only have a Philhealth ID. Fortunately, there are a few apps that accept Philhealth ID like the new app called “Cashwhale”. Based on experience, CashWagon does not have Philhealth as an option for valid IDs accepted, however, one applicant has been granted a loan using a Philhealth ID. Currently, CashWagon is offering 0% interest for first-time applicants.
- No Collateral — quick cash loans have no collateral, nor it asks for a guarantor or co-maker. Most of the times, you only need to supply contact details of your references, the ones they might call to verify your identity. Most of the times, online lenders won’t call your references during the application process.
- Fast disbursement of loan proceeds — once you are approved for a certain amount, it might be disbursed any time soon. You are not going to wait for several days. Check my experience with TALA Philippines here — one of the best quick cash loans online.
Cash Loans Online Cons (Disadvantages)
Now that we are done with the advantages, let me talk about the disadvantages of grabbing a loan offer ONLINE.
- High Interest — while you can borrow money fast — it will also charge you a high interest. Don’t be shocked, some online lending providers charge you as high as 30% for a loan payable in 14 days.
- Short-term loans — You don’t have a choice in terms of paying your loan. Most of these online lending apps will be due in 14 days. Some of them allow a 30-day term, but sometimes 30 days is not enough, right?
- The max amount of loan is only 20k — I have received several messages from people who ask to borrow 15k and up, well, the maximum loanable amount of most lending apps is up to 20k only — and getting the max amount is not that easy. You have to be a good long-time customer with good track records (paying on time every time) to qualify for the maximum loanable amount! If you are employed or running a profitable business for a least two years — you can try the personal loan without collateral by the Security Bank.
- Processing fees — some of these online lending apps have processing fees and it will be deducted upfront. Meaning, you will not receive the principal loan value in full. If you apply for a personal loan on a bank or cooperative — of course there would some sort of processing fees — however, when you talk about a 3k loan deducted with a 10% processing fee — that would make the amount small enough for your needs… But, of course, there are loan apps without processing fees as well, like TALA Philippines and CashWagon.
- Not so friendly loan collectors — Not all online lending providers have fierce and unprofessional loan collectors, but some of them will make you wish you did not apply for a loan in the first place. This will not happen if you can settle your loan on time — they tend to become unprofessional if you can’t pay your loan on time, especially if it is long overdue already. In connection, I have written a lengthy post about being maltreated by a collector and how to better deal with it to avoid stress and sleepless nights.
- Fear and shame factor to make you pay. Again, good paying customers will not experience this. If you can pay on time — of course — they will treat you with kindness. However, if you cannot settle a long overdue account — they will use fear and shame factor to make you pay. Example, a loan collector will inform you that your case is now on a legal department for an estafa case. Estafa? Is this true for nonpayment of debt? Read this post to know…
So, now that I have tackled both pros and cons of grabbing a loan offer online using mobile apps — are you planning to apply?
I have written this post to help you make a wise decision. I think if you can look for some other ways — like borrowing money with your family member or sibling — I think that’s a better choice.
However, if you don’t have other options — and you need some money badly anytime soon — cash loans online may be of help!
I would be happy to hear your story and experience on the comment below…
Image source: Pixabay.com (with text additions)