Online lending is still nascent, but it is growing fast. According to a July 2015 report by the National Small Business Association, about 2% of small businesses have used the easy online loans providers in the past year. The number of people taking out online loans is doubling every year, while bank loans are in decline, according to a 2014 Harvard Business School working paper. At that rate, online cash loans could become a more popular financing option for both individuals and small businesses.
Unlike banks, these types of lenders use algorithms to underwrite loans based on traditional factors such as cash flow, revenue and credit score; and non-traditional metrics, such as accounting data, past payments to vendors and social media data.
Here are some common types of online loans for people with a poor credit history.
Payday online Loans
A payday loan is a type of short-term loan where the borrower can return the total loan amount after receiving a monthly paycheck. Payday Online loans help borrowers to pay for emergency financial needs, medical bills, home repairs bills, tuition fees and Christmas gifts. There is no reason to worry about collateral and bad credit history, as the lender will not ask about them. Another advantage of payday loans is that they can be obtained fast without the hassle of much paperwork. To get payday loans online, you will need to fill an online application on the lender’s official website. If approved, the amount is credited directly to your account.
Online Cash Advance Loans
Also known as emergency online cash loans, cash advance loans are short-term loans that enable borrowers to attend to urgent or immediate expenses. They are ideal for people experiencing temporary financial difficulties. You can obtain the loans online or from emergency cash loan agencies. To qualify for the loan, you must have a direct deposit bank account and show that you have a stable employment and remuneration. If you meet these criteria, there are high chances your loan will be approved fast. Lenders do not perform a background check on the borrower to approve a cash advance loan.
Online Secured Loans
Secured loans are short-term loans where the buyer has to put down an asset as collateral. The collateral can be jewelry, cars, homes or antiques. You can qualify for an online secured loan whether you have no credit history or have a poor credit rating. However, if a borrower defaults in payments, the lender can sell the asset put down as collateral to get back their money. Secured loans offer low interest rates, longer repayment terms and higher borrowing limits. Examples of secured loans online include car title loans and home equity line of credit.
If you do not qualify for a bank loan or just need a fast online loan, this route could be the best way to go. The application forms take minutes to complete and funds are sent to your bank account within hours.