The world of direct online loans is one that’s shrouded in mystery for many Americans. Most are unsure of how they differ from conventional financial products, and what they think they know about small dollar loans or lines of credit is often incorrect. It’s easy to get turned around considering how much information is available online — some of which is false. Keep reading to dispel some of the biggest myths surrounding these kinds of financial products.
1. All Lenders Charge the Same Rates & Interest — False
The federal government has yet to implement any laws that regulate the rates or terms regarding personal loans, so there’s no universal rate that all American lenders have to offer. Each individual state, on the other hand, does have distinct laws limiting the kinds of fees a lender can place on small dollar or payday loans. To ensure your lender follows these you must confirm they have a state license to provide loans. If they do not have this accreditation than there’s no way to guarantee the rates, terms, conditions, or interest involved with their products are legal.
2. You Have to Put up Collateral — Sometimes False, Sometime True
It all depends on the type of financial product you get. A secured loan or line of credit is a financial product that’s secured against assets, like your home or vehicle, as a form of collateral. As a result, you typically get to lend more money than you would with unsecured loans and lines of credit. Direct lenders like MoneyKey don’t require collateral for unsecured financial products. As a result, the direct payday lenders at MoneyKey can offer small dollar loans and personal lines of credit faster than traditional lenders.
3. You Need a Perfect Credit Score — False
While the national average is 687, not everyone is anywhere close to this number. When you have a rating that’s close to the bottom of the scale, searching out a loan can become a daunting challenge. Many conventional lenders will turn away any application that has a sub-prime score. Direct lenders, on the other hand, don’t require a perfect credit score in all of their applicants. They determine your candidacy by collecting basic financial information in their initial application, after which they’ll verify your financial history during a convenient phone call.
When you’re in possession of all of the right information, you can make better decisions regarding your finances. Take the time to read up on state lending regulations and learn what your credit score is. These are both relatively simple activities that can help you lift the shroud of mystery and make a responsible decision regarding your loan.