How to spot the difference between online loans

By Pippa Thompson

Choosing the appropriate online loan can be tricky when you have bad credit, especially as there’s so much choice. Here, we look at what options are available to you and who they’d best suit.

Doorstep Loan
You can apply for a doorstep loan through an online process. An Agent will then visit you in your home to take you through an affordability assessment and ultimately decide whether you are eligible for the loan. If you are accepted, the Agent will arrange to deliver the money. Once your loan is delivered, they’ll arrange regular meetings and times in order to collect your repayments and are available to answer any questions or queries you may have. They are also your first port of call should you have repayment difficulties.

Useful for:
This loan is useful for people who want a face to face service when they get a loan and appreciate the relationship which that brings. It would also suit people who want more information to decide whether the loan is right for them as they can ask an Agent rather than interrogate FAQs.

Online Short Term Loan
An online short term loan does what it suggests, it’s an online loan, designed to be borrowed over a short period of time and managed online. Repayments are made automatically, whilst the account management is left to you. However, there is support on the phone should you need it.

Useful for:
This option is good for a person who only needs to borrow for a short period and wants a loan delivered straight to their bank account which is then managed online.

Guarantor Loan
If you need a larger loan, you could consider a guarantor loan. This is where someone who knows you, such as a family member or close friend, guarantees the repayment of your loan. This means that should you be unable to repay your loan your guarantor repays your loan for you.

Depending on the credit lender, your guarantor may need to be a homeowner, whilst both you and your guarantor will be subject to a credit check.

Useful for:
A guarantor loan is for someone who needs a larger loan but would be unable to get this from mainstream lenders such as banks. It’s worth bearing in mind that as the guarantor will be expected to make repayments if you can’t, they need to be understanding of your circumstances.

Payday Loan
The payday industry had a lot of bad press, but if you need some money to tide you over until your next payday and you know you can afford the repayments, it may be an option for you. Payday lenders offer loans which can be repaid in one lump sum over a number of weeks.

Useful for:
This option is for people who need a loan quickly and will be able to repay it, plus interest, on time.



About the author:

Provident has been putting customers at the heart of its business since 1880. It provides small loans to customers who would otherwise have been turned down for credit from more mainstream lenders.

Provident offers a face to face service through its local Agents, who take customers through their application, including an affordability assessment and ultimately decide whether you are eligible for the loan.

If the customer is accepted for the loan, the Agent will then deliver the money and collect repayments.

Representative 399.7% APR.

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