Easy bad credit personal loans with fast online approval: 2 reasons that make them unique

They may look similar on the surface but online loans and storefront loans have subtle but significant differences. Rodney wants to know what these are:

“I’ve checked easy bad credit personal loans with fast online approval and compared it with storefronts that offer payday loans. The interest and terms are almost the same. I’ve used a storefront loan but I’m curious though to try one of those online loans. Are there differences that I should know?” – Rodney, Seattle, WA

Many people think easy bad credit personal loans with fast online approval are the same with payday storefront loans and they could be right. Both loans have more similarities than differences. Let’s take a look at the similar features of both loans.

1 High interest and penalty fees

Easy bad credit personal loans with fast online approval and storefront loans have higher interest and payment fees than mainstream loans. They charge more because their borrowers are often profiled as high-risk. .

2 Easy and fast to get approval

Both loans are now easy to secure for people with a steady income and bank account even if they have bad credit. The proliferation of more lenders is driving more loan companies to offer competitive packages to get more borrowers. A direct lender can even offer same-day loans just to solicit applications. Moreover, because of stiff competition, lenders, like banks, are now leveraging better customer service and fair treatment to lure more borrowers to their side.

3 Risk of debt trap

Just as both loans are quick to secure today, both loans can easily put you in a debt trap. A direct lender of a guaranteed online loan for instance may encourage borrowers to keep refinancing the loan so it can charge more fees. That’s one way a lender earns off this business. A 15% monthly interest can easily skyrocket to over 300% annual interest if you extend the loan for a year. So be careful when someone is offering you to extend the loan. The rule of thumb is to pay off these loans in two weeks to avoid being charged with more fees.

4 Regulated by state laws

Both storefront loans and easy bad credit personal loans with fast online approval are governed by state regulations that restrict interest rates and fees. Some states even prohibit refinancing these loans guaranteed approval, while still others prohibit both loans. These states realized a high incidence of debt spiral in their areas because many borrowers would take out a loan just to roll over an older loan. Prohibiting loan refinancing stopped this perennial problem in their areas. This Consumer Federation of America site can help you find the specific regulations in your state.

Differences between loans

There are two critical differences between easy bad credit personal loans with fast online approval and storefront loans and they’re not directly about the loan itself. Rather, it’s about the manner how to take out both loans. After all, a loan isn’t just a financial issue, but a social one.

Interaction with a direct lender

Storefront loans allow you to talk face-to-face with a direct lender. This can be an advantage and disadvantage. If you have questions, a storefront agent can address your concern at once. But if you value privacy, that is, you don’t want to be seen walking into a loan store, easy bad credit personal loans with fast online approval may work for you.

Licensed to operate

Loan stores in your area are likely to be licensed. It’s easy to spot them so they won’t risk operating without a permit (it’s still a good practice to check if the storefront is licensed for good measure).

On the other hand, easy bad credit personal loans with fast online approval may not be licensed in your state to offer loans. They may even be operating outside of the country, in the UK or Canada, for instance. Keep in mind that these loans are regulated by state laws; even if an online lender has a permit to operate in Washington, for example, it still needs to secure a license in another state. Moreover, since states have different allowable interest rates and other terms, make sure that the online direct lender is sticking to the rules in your state, not on the state where it’s based.

CONCLUSION

Easy bad credit personal loans with fast online approval and storefront loans may be more similar than different. But the two differences are significant that you need to reconcile before choosing which is better for you.

By Jenny Chang

Jenny Chang is a senior writer specializing in SaaS and B2B software solutions. Her decision to focus on these two industries was spurred by their explosive growth in the last decade, much of it she attributes to the emergence of disruptive technologies and the quick adoption by businesses that were quick to recognize their values to their organizations. She has covered all the major developments in SaaS and B2B software solutions, from the introduction of massive ERPs to small business platforms to help startups on their way to success.