There are many companies that offer their loans online. Just type in Google "how to apply for a loan online" and we find a multitude of websites. Most of these pages have a simulator in which we can see what fee we would get, depending on the amount we ask for and the term to which we want to return the money. From there, we can process an online application and the company will reply to us shortly.
What are money loans, exactly?
First of all, we must make a clarification: a loan of money and a credit are not the same thing . In order not to complicate it, the main difference between a loan and a credit is that, while with a loan you get all the money you have asked at once, in a loan you can access that amount according to your needs.
Let's move on to explain what exactly a money loan is.
A loan is an operation by which a person, natural or legal, lends us a certain amount of money (called "principal"), subject to conditions set out in a contract signed by both parties. This type of operation is usually carried out by a legal person, that is, a company, generally a financial entity.
In a loan, the person who asks for the money has the obligation to return that money within a specified period, as well as pay commissions and a previously agreed interest rate. Generally the money is returned in several installments, although it can also be returned in a single installment.
The “lender” is the entity that lends us the money, while the person who receives the money is the “borrower”.
What types of loans are there?
There are different types of loans, depending on who asks for the loan or the time required for the study of the operation by the lender. We also find other types of loans in which the financial institution asks us for some type of guarantee to lend us the money, or asks us for the payroll or the last income statement to check our income level.
Here are some types of loans.
They are loans of not very large amounts of money , which are usually used to finance the purchase of goods, both tangible and intangible. Generally, to loans that are granted for the purchase of tangible goods, such as cars, large appliances, etc. it is called consumer loans. Personal loans are also often used to cover specific needs, such as paying for a wedding, a trip or a master's degree.
They are loans in which the amount of money borrowed is usually quite low and that provide greater flexibility when it comes to repaying the money . They are generally more expensive than the rest in exchange for greater flexibility in the return.
They are called fast loans because the entity that lends the money studies the operation in a fairly agile way, approving or denying the loan in a short space of time.
This type of loan is often used in situations where the borrower has an urgent need to get the money quickly.
Loans with ASNEF
ASNEF is the acronym for the National Association of Credit Financial Establishments. The ASNEF file is basically a registry of defaulters , which is used to evaluate the solvency of a person, whether physical or legal. Thus, if a person is going to apply for a loan and said person appears in the ASNEF registry, it is very likely that the loan will be denied, since the lender will doubt the ability of the borrower to return the money.
To appear in the ASNEF file, you do not have to be a great defaulter, only if we stop paying a telephone bill we can be included. The amount owed does not matter, since there is no limit whatsoever for them to register us in the file. Of course, we must be notified that we have been included in ASNEF within a maximum period of thirty days. From there, we can pay the debt for another thirty days, being eliminated from the file in ten days. If this is not done, we will appear in ASNEF for six years. If we subsequently pay the debt, we will be the ones who will have to notify ASNEF that the debt has been paid.
Therefore, a loan with ASNEF is one that is granted to a person who appears in the ASNEF file but who is able to demonstrate that they have paid the debt, or that their solvency has improved.
Loans without payroll
Loans without payroll are those that are granted to people who do not have a payroll, such as self-employed, unemployed or pensioners. They are usually loans of a very small amount, generally around 300 euros, and which must be repaid within a period of time that is rarely more than thirty days . The cost of this type of loan is usually very high. Sometimes, they even accept loans to people who appear in the ASNEF file, which is why the cost of these loans reaches very high levels.
Loans without collateral
A guarantee is a contract by which a third person offers a guarantee of payment of the loan contracted by the borrower, in the event that the borrower cannot afford to pay it. The person who agrees to pay is the guarantor, while the person requesting the loan is the guarantor.
The lender usually asks for a guarantee when the creditworthiness of the person requesting the loan is in question , or when the amount of money requested is very high.
Thus, a loan without collateral is one that is granted to a person without the need for a third person to guarantee it.
Mini loans are loans that are granted to people with low purchasing power, generally without assets to support the operation or people to guarantee it. They are usually loans in which the amount owed is small and their approval or denial is done in an agile and fast way. Normally, these types of loans are usually granted so that the person requesting it undertakes some type of economic activity that allows them to improve their standard of living and, therefore, repay the amount borrowed.
What makes an online loan special?
Requesting a loan online has multiple advantages . To begin with, the most obvious, you can get it without leaving home. Thanks to the internet, it is less and less usual to go to a branch of a financial institution to carry out any procedure. In addition, hiring an online loan gives us access to many more entities that only operate in this area.
In addition, the vast majority of loans offered online are less demanding in terms of the requirements that must be met for the entity to grant us the loan. As we discussed earlier, you can get loans without having a payroll, something almost impossible to find in any traditional financial institution.
The same happens if we find that we are registered in the ASNEF registry. In this case, any financial institution would ask us to demonstrate our ability to pay or even present a guarantee, but on the internet we can find a multitude of companies that would grant us the loan without guarantee. Of course, at a higher cost.
The management for the granting of an online loan is much more agile, quick and simple than the traditional one. The study of the operation is usually carried out at the moment and in a few minutes we can know if we have been granted the loan.
In addition, they transfer the money to our account in a very short time, so online loans usually come in handy in cases where we need the money urgently and we cannot be waiting for a traditional financial institution to study the operation and we have lots of paperwork signed.
Finally, entities that grant online loans do not usually ask what we want the money for or what we are going to spend it on. This, which may seem unimportant a priori, can cause a traditional financial institution to deny us a loan, since they may consider that the expense is superfluous or that we are going to enter a spiral of rhythm of life that will prevent repaying the loan.
Should I apply for loans online?
As we mentioned before, they are usually requested to face urgent payments that we did not have planned, or to buy appliances, televisions or to give ourselves a whim, such as a trip.
When applying for a loan online you have to take into account several things.
The main one is that we should not go into debt if we are not going to be able to return the money requested . This is very important and should apply not only to online loans, but also to traditional loans. We must take into account our ability to pay and not ask for more money than we can return, since, if not what seemed to be a good operation, it may turn into something that creates problems for us in the future.
In addition, we must bear in mind that online loans, in general, tend to have a higher cost than traditional ones . As we have already mentioned, they have the advantage that the requirements to be granted this type of loan are lower, which means that they have a higher cost, due to the greater risk assumed by the entity that grants us the loan. Something perfectly understandable.
However, this does not have to be a disadvantage, since in many cases it allows us to access a loan at a perfectly affordable cost, something that in a traditional financial institution we would not have access, or it would entail a considerable loss of time in comparison with online recruitment.
Time is also a fundamental key when hiring this type of loan. By doing it online we save ourselves having to go to a branch of a financial institution, with the loss of time that this entails. Time that we can dedicate to other things that are more productive for us.
In addition, contracting loans online also has advantages over contracting by phone. First, because we save the call, which in many cases is usually to numbers that have a high cost. And second, because we have access to all the loan conditions, being able to read them with confidence.
When comparing the cost of the loan, it is best to look at the APR (Annual Equivalent Rate), since the variability of the terms can make something that seems cheaper, is actually more expensive in terms of APR.
How to find the best loans online?
As when one is going to buy a car or a television, the main thing when hiring an online loan is to find the one that best suits our needs .
Finding loans online is very easy, just type in the Google search bar "online loans" and a multitude of pages appear with dozens of companies that offer online loans.
In these pages one can find from loans of small amounts (up to approximately 300 euros) in which there are hardly any requirements to be granted, to loans of amounts of money that can reach several thousand euros.
In addition, many of the companies that offer online loans have simulators on their web pages in which we can calculate the loan fee based on the amount of money we want to request and the term in which we want to return it.
We also find pages that try to make it easier for us to find the online loan that best suits our needs. Within these pages we find loan finders and comparators . These allow us to search for the best online loans that are offered, in order not to have to search page by page.
In addition, the comparators add all the information of the different online loans in a single web page, allowing us to compare the different loans quickly and easily.
Is a loan finder to find the best loan useful?
Search engines and comparators are very useful to find different types of products that are offered online. In the case at hand, that of online loans, is no different.
The comparators are web pages that do part of the loan search work for us. Thus, these pages collect information on a multitude of online loans directly from the entity that offers them, presenting all that information later on a single website, allowing us to buy between the different offers much more easily and quickly.
In addition, in many cases they allow us to filter based on our needs . This fact is tremendously useful, since it allows us to focus on analyzing the different alternatives that best suit our needs, without having to go entity by entity looking for information and seeing if it is what we are looking for, or not.
All this means a considerable time saving when it comes to finding the online loan that best suits us. In addition, the comparators usually show the most important information of each offer, facilitating the comparison.
To this must be added that the comparators show the information in a homogeneous way, in such a way that they simplify even more the final decision on which loan to hire.
Should I Always Trust a Loan Comparator?
As we have already mentioned, comparators are a simple and reliable way to find the online loan that best suits our needs.
In the first place, because they gather a large amount of information about a multitude of companies that offer online loans. Without these types of pages, we would have to spend a great deal of time gathering a similar amount of information.
And, secondly, because the fact of being able to filter and have all the valuable information presented in a homogeneous way helps us make the decision better, since financial institutions often use terms or clauses that are not easy to understand.
However, despite all these benefits, comparators also have their limitations .
On the one hand, we can find comparators that are not very reliable due to the fact that they offer few alternatives. Or because they are simply outdated, or also because there are companies that offer online loans that the comparator's developers are not aware of.
On the other hand, many times comparators offer biased information, since they only show information from companies that pay them some type of canon, fee or commission for appearing in the comparator
These last two facts can make the information shown by the comparator not complete or one hundred percent reliable, leading us to make a decision that may not be the best.
Why do some entities grant loans without providing guarantees?
Surely you have wondered how it is possible that some entities offer loans without requesting any type of guarantee, or even to people who appear in the registry of defaulters, while traditional financial entities ask us for all kinds of documents to study whether they grant us, or not a loan.
We will try to explain it in a simple way.
When a company grants a loan it is assuming a risk. After all, for this entity, granting a loan is an investment with which it hopes to obtain a profit. And the higher the risk of the operation, the higher the expected profit.
The guarantees, as their name suggests, guarantee that the entity that lends the money will recoup its investment, in addition to some interest. As collateral minimizes the risk of default, the return demanded by the lender is lower. The more guarantees, the lower the interest rate they will charge us for lending us the money .
On the other hand, as we have seen, there are companies that do not ask for any type of guarantee to grant a loan, indeed, some even grant loans to people who appear in records of defaulters, such as that of ASNEF.
So where is the catch? Why don't they ask for guarantees? Basically, these entities compensate for the risk of not requesting guarantees in two ways: the first, by granting loans of not very large amounts, and the second, thereby charging much higher interest rates.
In this way, by charging very high interest, they compensate for the risk of non-payment. On some occasions, the interest rates charged by these entities that do not ask for guarantees are so onerous that, even if there is a non-payment of a fee, the entity has already recovered the money borrowed via interest. It may even be the case in which the interest charged in operations that have not suffered defaults more than compensate for the defaults of other operations.
Ultimately, the business of these entities is to lend money and make a profit for it . If they repeatedly lose money they would dedicate themselves to something else.
What to keep in mind when applying for a loan?
Applying for a loan is not a decision that we should take lightly, since there are many factors that we must take into account. Having a work contract, providing guarantees, the repayment term or the interest that we must pay, can make a loan much more expensive or cheaper.
Analyze your financial situation
To begin, we have to stop for a moment and coldly analyze our financial situation at the time we decide to apply for the loan. We need to know exactly our current income level and make a realistic estimate of our future income. Likewise, we must be clear about our fixed expenses, that is, those that we cannot do without.
With this, we will know more or less precisely if we can face the payment of the loan installments, since incurring delays or defaults will only increase the money we owe, via late payment fees, etc.
Ask only for the money you really need
Another factor to take into account is that we should never ask for more money than we really need . Some people are tempted to ask for more money than they initially needed to give themselves some kind of extra treat that can end up being very expensive. It must be borne in mind that, the greater the amount of money requested, the greater the amount of money that we have to return, since the higher the interest and commissions generated by the loan.
Return the loan as soon as possible
Regarding the repayment period, we must bear in mind that the longer said period, the higher the interest we must pay , since the entity that lends us the money assumes a greater risk. Therefore, it is advisable to choose a repayment term as short as possible, always taking into account that we can face the payment of the loan installments without stress. In this way, the cost of the loan will be lower and we will free ourselves from the burden it entails.
The importance of APR
When buying the cost of the loan, that is, the interest that we must pay, we must use the Annual Equivalent Rate, APR , since it includes interest and other expenses and commissions that we must pay in annual terms.
Also, keep in mind that, in traditional financial institutions, on many occasions, more and more, the granting of the loan is subordinated to the contracting of insurance, credit cards or some other product, which can make the loan even more expensive.
Try to justify the expense
Although most companies that offer online loans do not ask for a justification for what the money is borrowed for, this does not usually happen when we apply for a loan in traditional financial institutions. These entities usually ask us what we want the money for, since they have different types of loans, depending on the use that we are going to give the money they lend us.
Thus, each product will be focused on meeting a specific need: buying a car, paying for a vacation or doing home renovations, among others. Each of these finalist loans has special conditions , depending on the destination that we are going to give the borrowed money. That is why the financial institution may ask us for some type of document (a purchase commitment, invoice, etc.) that proves that the purpose of the loan is what we have really said.
Try to avoid fast money without guarantees
Generally, traditional financial institutions usually ask for certain information when studying whether they grant us a loan, or not. Among the information they will ask us for are the payroll, employment contract, or invoices and bank statements in the case of being self-employed.
This is so because the entity needs to evaluate the risk of the operation and thus establish the interest rate that it is going to charge us.
Therefore, the more guarantees that we are going to be able to repay the loan within the indicated term, the lower the risk of the operation and, therefore, the lower its cost. And, on the contrary, the fewer guarantees we provide, the higher the cost of the loan .
As we have seen previously, there are a large number of companies that offer online loans without asking for guarantees, and even grant us the loan if we appear in the ASNEF registry. This, which a priori may seem an advantage over traditional entities, can cause us many problems when it comes to repaying the loan.
The entities that risk granting a loan without guarantees usually charge very high interest, which means that in the end we have to return much more money than we initially asked for.
Therefore, fast and unsecured loans should be avoided as much as possible, resorting to them only if we need the money urgently and with extreme urgency.
Search and compare
Just as when we go to buy a car we visit several dealerships in search of the one that offers us the best price, or we compare the different telephone companies looking for the best offer, when making financial decisions we should do the same.
That is why, when applying for a loan, we must search among the different entities that offer them, whether online or traditional, and compare the different products on the market. This way we will be able to find the loan that best suits our needs.
This work can be complex and take a long time, so a recommended option is to use the comparators that we discussed earlier, as they can guide us when choosing which loan is the best for us based on the amount of money that we go to ask, our ability to return the money borrowed and the term in which we want to do so.
As we have seen, there are many entities that offer online loans , which can be a good alternative to face unforeseen or small expenses. The conditions offered by these companies are somewhat similar, but it is convenient to compare and choose the one that best suits our needs .
Finally, keep in mind that the cost of some of these loans can be high, so you should not ask for more money than you can repay without problems.