Is an online line of credit too good to be true? Well, borrowing money online can be fast, easy, and convenient, but like with most things in life, there are pros and there are also some things to look out for. This is especially true when it comes to making major financial decisions, like applying for personal loan.
Today, we’re going to look at some of the pros and things to look out for with an online line of credit to help you make an informed decision on whether or not it might be right for your needs.
What is an Online Line of Credit?
A line of credit is a type of loan that works similarly to a credit card. If you get approved for one, you’ll gain access to a pool of money that you can borrow from a bank or lender when you need it. The total amount you can borrow from is called your credit limit. You can use your line of credit on a continuous basis as long as you have available credit, and you’ll only need to repay the money you borrow along with any applicable charges, not the total amount of your credit limit.
An online line of credit works just like we described, but the important part here is that most, if not all, of the borrowing process happens online. This means that you’ll apply online, get your decision virtually, and you’ll likely be able to pay back online.
Potential Benefits of Line of Credit Loans Online
Now that we’ve looked at some of the important details on an online line of credit, it’s time to go over some of their key benefits. Let’s get started!
1. The Convenience of Not Having to Apply in Person
This is probably going to be one of the main selling points for a lot of people. For a lot of people, access to a financial institution can be a problem. On the other hand, if you decide to apply for a line of credit online, you can take back the time you’d lose when applying in person.
You also might not have to worry about getting to the financial institution during business hours. Some companies that offer online lines of credit allow you to apply seven days a week, 24 hours a day, from the comfort of your own laptop, tablet, or smartphone.
2. Fast Turnaround Times
It can be hard to say exactly how long it’ll take to be approved for a line of credit in person. It usually depends on each financial institution — and sometimes even the individual branch — but the process can be slowed down by things like:
- The branch’s hours of business
- Having to wait for an available appointment
- Finding the time in your schedule to go to the financial institution
On top of this, the type of loan you’re applying for will play a role in the length of time the application process takes.
Example
For example, if you were to apply for a home equity line of credit (HELOC), the process could be longer than it would be for a short-term personal loan, and it could have more requirements. A HELOC uses the equity of your home as collateral, so the whole borrowing process may require more information and be more extensive. You could be looking at anywhere from two weeks to a couple months to get approved for a HELOC[1].
In emergency situations, you may not have time to apply for a loan in person. You may need to know if you qualify right away. If that’s the case, applying for an online loan might be a good choice. On top of the application time being quick, you could also get your money in a single business day if you’re approved.
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Things to Look Out for with Line of Credit Loans Online
While there are definitely some benefits to an online line of credit, there are also some things that you’ll want to keep in mind before you start the application process. Here are two factors to consider.
1. A Lack of Customer Service
Customer service may not always be at the top of your list when looking for a credit product until you’ve had less than ideal service. This is why it’s important that you work with someone who takes extra pride in the level of service they provide. Before you apply for a line of credit online, make sure to read reviews to see what other people’s experiences have been. There are plenty of financial organizations that service line of credit loans online with outstanding customer service, so keep on the lookout for them!
2. Safety Concerns
Any time you’re looking for credit online, you want to be sure you’re working with a reputable company. Unfortunately, the reality is that we live in a world where online loan scams are a very real problem, including fraudsters offering online loans and lines of credit as bait. Again, it’s important for you to make sure you do your due diligence and research financial institutions to make sure they’re responsible and take your security seriously.
Disclaimer: The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only, and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through FreshStart Blog or CreditFresh website.
[1] https://www.associateshomeloan.com/how-long-to-get-home-equity-loan/
