Loan application has evolved over the years and it became easier to apply if you are in a rush. You can even find payday loans if you need the money within the day. In the past, there are only storefront lenders, but you can now get loans by applying online.
With all the different ways to apply for loans, security is always the main concern of borrowers. Even if they need the money immediately, they will not simply apply for certain loans without any assurance that their information is safe.
You have two options right now: storefront lenders and online lenders. But, which one is safer?
The Difference Between Storefront and Online Lenders
Although the process is almost similar for storefront and online lenders, they have many differences that might affect your decision making.
1. Physical Interaction
One of the main differences between storefront and online lenders is face-to-face interaction. Some people would prefer to get loans from storefront lenders because they can meet and talk with them personally.
In terms of security, a lender talking to you in person is more trustworthy than a person who is only talking with you through chat. If it is your first time applying for a loan, it would be easier to trust the lender if you have physical interaction with them.
2. Asking Questions
It is more convenient to ask questions personally, especially if it is about money matters and loans. First-time borrowers may have tons of questions about the loan and how they can pay it back efficiently.
Although you can do this online, you can get the exact answers that you need by asking the lender personally. They can also assure you that their loans are safe and fast.
3. Getting the Money
Most of the time, physical lenders would give you a post-dated check instead of directly depositing the money on your bank or giving out the loan in cash. There are instances where you can get the money in cash if it is not too big, but they often give out checks.
When you apply for loans online, the money will be sent directly to your bank account once it is approved.
4. Paying the Loan
Physical lenders would require you to go on a trip to their store and pay the loan yourself. It is not a problem if you have a car or you live in the city. However, if you don’t have a car or you are a few hours away from the city, it will not be convenient to pay the loan on the store.
Online lenders allow you to make payments through banks or other online money transfers. You don’t need to go out and you can just make the payment with your mobile phone or computer.
The Negatives of Online and Storefront Lenders
Knowing the benefits is a good thing, but you should be aware of the disadvantages as well. You have to remember that loans that are too good to be true are usually scams. Lenders will always come out on top in every transaction if you think that the lender is losing out on a certain deal, then it might be a scam. Here are some of the disadvantages of both storefront and online lenders.
It is extremely inconvenient to apply for loans on a physical store, especially during the Pandemic. When everybody is expected to stay at home and refrain from going out, how can you visit a physical lender to apply for loans?
Many people don’t have jobs as well so they usually need money to get through the lockdowns. Since most physical stores are closed, how can they get a loan?
Physical lenders are only open during business hours. If you suddenly need money after work hours, you won’t be able to apply since these physical lenders are already closed.
We’ve already mentioned this a while ago. It is a bit inconvenient to visit the store to pay the loan, especially during the Pandemic. The chances of contracting the COVID-19 virus is higher if you have to go out and pay the loan in person.
1. Waiting Time
Online lenders would take a day or two to verify the information that you provided. It means that they need to check if your personal information is real including your name, age, birthday, location, and more.
These lenders are more meticulous because you are not submitting real documents. They might ask you to scan your papers and send them to them, but these are only scanned copies. They need to make sure that the person borrowing money is a real person and not a dummy account.
Because of this, you will have to wait for about 24 to 48 hours before your loan would be approved.
2. Difficulty in Asking Questions
If you have any questions, they usually give out their phone numbers so you can call them directly. You can also chat with them through their customer service. However, when it comes to loans, it is always better to speak with the lenders personally as it would help clear out any doubts. If it is your first time, it is much better to look for a storefront lender.
It is easier to notice if something seems fishy about the lender if you can talk to them personally. It is extremely hard to know if they are trustworthy or not if you will only contact them on the Internet. There are a lot of scammers out there and if you failed to find a trustworthy online lender, your personal information might be in danger.
Safety Issues on Storefront and Online Lenders
Since we’ve already talked about trustworthiness, you should know if it is safe to transact online or through storefront lenders. We will list down some of the safety issues that you might encounter when transacting with storefront and online lenders.
1. In terms of trustworthiness, a storefront lender is a better choice. Most of the time, your friends and your family members would recommend them, which means that they already tried the loan service and they had a good impression about it.
2. It is easier to verify if a storefront lender is trustworthy or not. You can check if their business is registered and if they have a permit to operate in your area. If they have all of the requirements to operate legally in your city, it means that they are trustworthy.
For online lending, it is very hard to know if they are really trustworthy or not unless someone would try it first. If you have a friend who already tried an online lending service multiple times and there are no problems with it, you can say that
3. Phishing is a very common cybercrime wherein the perpetrator uses different ways to get vital information from the victims. It can be done through email, chat, call, or when you are applying for a loan.
What happens when your personal information was taken by scammers? They can use it to apply for loans under your name, use your credit card to buy things on the Internet, and worse, they can use your name to scam other people.
4. Online lending is currently the best option because of the pandemic. It is safer to opt for online loans because you don’t need to go out and risk being infected by the virus. Right now, storefront lenders are not really your best option and it is better to get a loan where you won’t have to go out. The money will be transferred to your bank directly so it is a more viable option today.
Online lending is fairly new and more and more people are just finding out about it. There are still a lot of issues surrounding this type of lending, but because of the pandemic, a lot of people have already tried this option, especially those who are currently unemployed.
All these lenders are very safe as long as you do your research about them. If you are one of those people who just apply for loans without looking deeply about their background, you might be scammed one of these days so don’t hesitate to spend some time reading reviews and asking your friends and relatives if they know something about online lending.
You can also contact the lenders in your area and ask them if they offer online lending services. If you’ve applied for loans before, you probably have the phone numbers of the storefront lenders in your area. You can ask them directly so you won’t have to spend time looking for online lending services.
Even if you need money immediately, it is not a good idea to just get an online loan because you need it. At the end of the day, proper research and data gathering would help you determine if a lender is legitimate or not.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes