Online Lending: Pros and Cons

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Online Lending - is it right for you?

With so many choices out there, here are the Pros and Cons:



1. Lots of flashy deals out there. In order to attract business, online lenders know that they must make a good offer, so they usually have competitive interest rates.

2. Without slick salesmanship, the numbers have to speak for themselves. You won’t feel obligated to go with someone just because he has become your buddy.

3. Credit score is always important. If your credit profile is good, you are a perfect candidate for online financing. Spending a few hours in front of your PC can lead to multiple email offers. Let mortgage bankers and brokers outbid each other to win your business.

4. Most companies on the Internet stick with traditional methods for application approval and funding. All mortgage loans are protected by state and federal regulations, regardless of where they originate.

5. When you’re checking only the facts, loans are easy to compare. Double-talk doesn’t transmit via the Internet.

6. Online, borrowers can skip the middleman.



1. Lack of accountability with online lenders. Local lenders rely heavily on referrals and repeat business, so when loans go bad, it reflects poorly on the company.

2. A new way of doing business. Since online lenders are a recent addition to the marketplace, they haven’t earned the reputations of their off-line competitors.

3. License requirements vary by state, not all companies can do business in your state. It’s possible that you could select an online lender who isn’t licensed in your jurisdiction, where they do not have legal authority to do business. 

4. No face-to-face contact, which creates some lack of accountability. Some online lenders are bad apples, as are some traditional lenders. Internet suspicion may still be too big a deterrent for you.



If you are ready to surf for online lenders, take the following precautions:

1. Expect a professional and easy to use website. A poor site is an obvious bad sign, even though a good website doesn't offer any guarantees of a decent company. 

2. Do your research. Many lender sites offer the company’s history and business practices. If you can’t learn any information about the company, check others. 

3. Ask me.



Rupa Nunamaker

Coldwell Banker

St. Petersburg, FL

ph: call or text 727-430-2350


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