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Guaranteed personal loans online with instant approval: The pros and cons you may not realize

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Guaranteed personal loans online with instant approval are easy to get now with more choices to choose from. While that’s a clear advantage for borrowers, there are disadvantages. Drew wants to know more about both the pros and cons.

“Just like millions of Americans today, I’m turning to online personal loans to augment my income. I use this loan to pay for the mortgage when my budget falls short. But are these loans any better or worse than storefront loans?” – Drew, New York City, NY

It depends on your situation. Both loans provide a quick access to cash where otherwise mainstream creditors will turn you down (this is the same situation in the UK and Canada, where short-term loans are popular). To know if this type of loans is for you, let’s spell out both the advantages and disadvantages.

Benefits of guaranteed personal loans online with instant approval

1. Easy access to fast cash

The main advantage of these loans is that it’s fast and easy to secure. A direct lender only asks for your personal and work information and your bank account details. Generally, you just fill up an online application and send it to a direct lender with one press of a key. If you have regular income, you can even get an approval on the same day and the cash transferred to your bank account immediately.

2. Provides an option even for people with bad credit

It’s difficult to secure a loan when you have a bad credit even if your financial situation is a lot better now. Personal online loans instant approval can be your alternative to banks and traditional creditors. At the least, you have access to emergency cash when you need one.

3. Convenient to secure

The loan process can be completed at the comfort of your house. No more waiting in line and feeling a little embarrassed when passersby see you. With online loans nobody will know that you take out a loan except you and the direct lender.

Disadvantages of guaranteed personal loans online with instant approval

1. High interest and fees

The consequence of getting guaranteed approval loans without a credit check is getting a high interest rate and fees. This is one way a direct lender lowers his risk of losing money when you default. Because of these astronomical fees—the interest is regulated with a cap by the state—online personal loans are best used for emergencies when you have no choice but to secure cash fast.

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2. Your giving out personal information online

If you’re wary of giving away personal information over the Internet, you may find online loans uncomfortable. You’ll be asked to submit your full name, address, work background and other personal data to get the loan. Nevertheless, lenders today use encrypted technology that protects your data from being hacked. Think of it this way—if you’re okay buying from Amazon or Apple Store where you provide the same personal information, the hacking concern may not be as serious as you’ve imagined.

3. Risk of debt trap

Because guaranteed personal loans online with instant approval are easy to secure even for people with bad credit, you may find yourself taking out more than what you need. This can easily lead to recurring loans to pay for your previous loans. The result is you end up paying for as much as three times the principal. A Pew Charitable Trusts 2012 report indicates that borrowers are indebted for an average of five months when in fact these loans should be repaid in just two weeks.

Risks of online loans

It is wise to sieve online loans to weed out the bad cases. Understand the risks and avoid them to ensure your online personal loan helps to boost your financial health.

CONCLUSION

Guaranteed personal loans online with instant approval have their share of advantages and disadvantages. Make sure to weigh your options carefully before taking out this loan.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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3 Comments »
Timberwolf says:

Online loans for emergencies have a high share of risks. Since there is no credit check, the lender is sure to charge a high interest rate. Use this type of credit only if you run out of all other options.

Reply to this comment »
Trenton Law says:

Don’t use these loans to augment your income. You’ll end up running after the hefty penalty fees. Robin, you should have tied up the risk of debt trap to the reader’s statement that he’s using it to augment his income. How do you expect to pay for the loan if you can’t even pay for regular expenses? It boggles the mind, really. I fear he’ll end up as a statistics in that Pew Charitable Trusts study. I’ve read it and, true, many poor Americans are using these loans to pay rent or buy food.

Reply to this comment »
Marla Lobe says:

I wouldn’t really be worried about giving out personal information online. Who doesn’t? We’re all around Facebook, Twitter, Google plus, paypal, Amazon, other e-commerce sites… so this additional submission of personal data is nothing new. I may not even merit a mention under disadvantages. Of course to add a layer of protection on your information, make sure the lending site is legitimate and not out to scam you. As for the number one advantage, yes it is a plus. But it can also easily turn to a disadvantage if you don’t have the discipline to pay back.

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