6 Factors to Consider Before Borrowing From an Online Lender

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Sometimes, your cash reserve runs low. In these instances, loaning from the bank is the go-to option, but loan applications—whether for collateral loans, auto loans, or any loan product—don’t always go as planned.

Rejected loans are typically due to a mismatch with the lender’s criteria, poor credit history, credit report errors, or insufficient income. 

You don’t have to struggle to find a suitable lender. Online lending companies and other non-traditional financial service providers are ideal options as they offer flexible loan terms and requirements.

What are Online Lenders?

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Online lenders, also called online lending companies or online loan lenders, are non-banking financial institutions that provide online term loans to those who don’t qualify for bank loans. Typically, they process loan applications via their websites or apps. 

In the Philippines, online lenders must register with the Department of Trade and Industry (DTI) and the Securities and Exchange Commission (SEC) to operate legally. 

Compared to traditional banking institutions, online lenders offer several benefits. These include fast approval, 24/7 loan application, convenient online loan processes, and minimal documentation requirements. These advantages are ideal for those that need loans urgently. 

What to Know Before Borrowing from an Online Lender

Before going online and contacting online lenders, take time to assess the following factors to make more informed and secure loan requests.

Check their legitimacy 

Scammers are prevalent, especially in the online space. Nowadays, it’s easy to deceive people into thinking they’re legitimate and professional online financial service providers. 

To ensure a positive loan experience, research online lending companies’ history, records, products or services, credibility, and policies. These types of information can help you find the most favorable deals from online lenders.

Read the fine print

Whether you’re applying for personal or business loans, there’s more to what you see on the agreement terms. 

Once your lender presents you with the loan contract, go through it thoroughly. First, read and understand all the terms and conditions of your loan. Then, look for possible fine prints. You want to avoid hidden fees and other penalties.  

Be careful with data access permissions  

Convenience comes with a cost. Mobile apps provide unmatched accessibility and speed but are also windows to sensitive data sharing. 

When availing of banking or loan services via online platforms, read the online lender’s policies regarding personal data. Know what kinds of data they’ll request to receive. You can’t neglect your privacy’s safety, so do what you can to protect it. 

Know and prepare the requirements and documents  

You can’t avail of loans from online lenders if you don’t present the necessary documents. Having these ready makes it easier for them to process your loan requests and perform a background check to see if you’re qualified.

Depending on the online lender, you might have to present the following IDs:

  • Social Security System (SSS)
  • Driver’s license
  • Passport; or
  • Unified multipurpose ID (UMID).

Apart from valid IDs, your proof of income is vital, too, helping lenders verify that you have a steady source of income and can pay your dues. The documents they will ask for will depend on whether your status is employed or self-employed.

If you’re an employed applicant, be ready to present the following documents: 

  • BIR Form 2316 (W2);
  • Certificate of employment  (COE); and
  • Latest 1-month pay slip.

If you’re self-employed, online lenders may request these documents: 

  • SEC registration of your business; and 
  • DTI registration of your business.

Identify the loan products you can afford

There are several loan types to apply for, including auto loans. It’s easy to sign on the dotted line of a loan contract, but paying it off might not be if you have financial limitations.  

Make an honest assessment of what loan terms are workable within your budget. Then, weigh your options well. The last thing you need is a pile of debt that will make your situation much more difficult to manage.

Find the loan that best matches your needs

Getting a loan requires you to review your financial situation and needs to determine the most relevant loan product. 

Suppose your business requires more trucks to meet delivery demands. In that case, a truck loan is your most appropriate option. Meanwhile, consider opting for a collateral loan if you urgently need money.

Make Loaning from Online Lenders a Breeze 

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Finding suitable loans can be challenging, but it can become a worry-free process with the right partner. 
AsiaLink Finance is one of the top providers of finance loan in the Philippines. Its competitive interest rates, easy application process, and one-day approval policy let you enjoy quality services for a broad range of loans.

Interested in getting a quality second-hand car? Apply now for a used car loan!

Gab Doromal