If you are looking for a loan, you probably have already looked around for various alternatives. In addition to going to the house bank, loans are now also offered online. But what are the differences between online and bank loans and which is the better type of loan?
Basically, all providers of installment loans have a similar offer. As a borrower, you receive a fixed amount, which you then pay off over a certain term. You make interest payments to the bank that grants the loan. However, whether you complete it online or in your branch bank makes very little difference for the product itself. However, there are some aspects of the two types of credit that differ and may be relevant to the choice.
The online loan wins the interest comparison
The most impressive advantage of the online loan is the usually lower interest rates. Since banks that grant their loans online have much lower costs, they can offer lower interest rates. Online credit is also more competitive and the profit margin that is estimated is lower.
Branch banks can rely on the loyalty of their customers; after all, they usually maintain their current account with the institute or have acquired insurance. Furthermore, the number of available competitors that a borrower can choose from is lower. If you want to opt for a branch bank loan, you have far fewer options that are easily accessible.
What are the advantages of online credit?
But in addition to the lower interest rates, the online loan has other advantages. First of all, the convenience is higher because you can easily process the loan via the Internet. Once you have decided on a provider, all you have to do is submit the application and, after a thorough review, you will receive the loan agreement.
The loan amount will then be paid out as quickly as possible. In addition, the Internet and thus the online credit is available 24 hours a day. With a branch bank you have to be on site at fixed bank times and conclude the loan agreement there.
Better comparability and market transparency
Another advantage of the online loan is the much better overview of the market and the different providers that can grant you a loan. Comparison portals like the credit platform smava.de clearly show you all available products. This gives you a convenient overview of all providers on the market within a few seconds and allows you to compare them. The main advantage of this is that you can compare the different providers without asking for a loan.
While you have to make a loan request to a branch bank in order to receive a specific offer, the conditions for online loans are clearly presented. The major disadvantage of credit inquiries is that each of these inquiries is noted in your credit rating information and thus has a negative impact on your credit rating score. So it is practically impossible for you to compare different providers of classic bank loans.
What are the advantages of a branch bank loan?
Despite the relevant advantages that an online loan has, the loan from conventional providers can also have advantages in some respects. Since most customers already have a relationship with your bank advisor and have known your bank for some time, you can rely on personal advice. For the purpose you need, your bank advisor may be able to offer you a personal offer in addition to his specialist knowledge. This will not be possible with an online loan. Your advisor will also be able to answer detailed questions about the terms of the loan. With an online loan, on the other hand, you should know exactly what you are looking for, because the small print can hide some details.
Do the types of credit differ in terms of the requirements?
You are probably aware that a loan is only granted after a thorough review of your creditworthiness. After all, the bank wants to make sure that they get their money back. Contrary to the statements of many online banks that advertise a “loan without credit rating”, it is generally difficult to obtain a loan without the appropriate conditions. Although there may be exceptions, the loan without credit rating is often a dubious offer, which you should avoid as far as possible. Even if the offer is serious, these loans come with considerable interest costs.
It can thus be summarized that regardless of which provider you want to take out a loan with, the credit rating examination plays a significant role. Should you have stumbled across an offer that completely ignores the criteria of the credit check, you should be careful.
Which loan type should I choose?
As is so often the case with questions relating to finance, there is in general answer to the question of the perfect type of loan. In general, by taking out an online loan, you can get significantly better terms for your loan and benefit from lower costs. Furthermore, the process is very straightforward and you can quickly and easily get a very good overview of the market. However, online credit is not always the best choice.
If you appreciate the contact and competence of your bank advisor and would like personal advice on the subject of credit, classic bank credit can also be a better alternative. Although the providers on the Internet are usually also very reputable, trust in your own house bank is much greater.
Choosing the right loan has many facets
In order to make the right decision when choosing the loan type, you should first of all explore your own preferences. The exact weighing of the individual offers and a comparison of the providers should also be undertaken in any case.
The better conditions and lower costs make online loans on paper very attractive. However, these are not always the better alternative.