[Guest post] 5 Tips If You're Shopping for a Loan Online

Shopping for a loan online is the way to go these days. Long gone are the days when you'd walk into a bank with your hat in your hands, hoping to get a new car. Thanks to the convenience and vast array of options available, getting a loan online is generally easy and pain-free. That said, there are still some things to be on the lookout for. This quick guide should help you figure out how to sail the digital seas of online loans and determine what the best options for your situation are.

Finding the Right Site

There are too many sites out there offering loans these days, but you can help narrow down your choices by focusing on the specific loan type you're looking for. Likewise, know the market. Sites like Axo Finans are great at showing multiple different loan offers in a single place, but they focus on Norwegian clients. You should have something similar in your area that can make it easy to see what's out there.

Still, it doesn't hurt to do some research outside of a loan aggregator. You might be surprised at what you find. While those aggregators have every incentive to get you to sign up for a loan, they may miss a great opportunity that can be found out there on the web.

Read Reviews

This really can't be overstated enough. Reviews on loan companies are everywhere. Just search up the company you're considering signing with and add a social media site like Reddit or X. You'll find dozens of threads of people either complaining or praising. Don't discount a site just because it has a bad review, though, as it's nearly impossible to operate on the scale of a loan company without getting a bad review.

The important part is knowing how to filter through them for important information. If you come across a bad review, really look at what their complaints are. Is it hard to get a hold of someone? Do they not offer hardship programs should you need them? Is it a complete scam? These are important details you need to know before signing and are easily found online.

Deciding On What You Can Afford and Need

This is probably the most important step and one you should have already done if you're looking for a loan. Before you even look at interest rates, get your budget together. If you don't have a budget, go back 3-6 months and start adding everything up. Separate it by month and type of transaction. Make a spreadsheet with a section for rent, utilities, groceries, extras, etc. If you are bad at spreadsheets, you're in luck. There are thousands of templates out there that you can use, most of them being plug-and-play.

Once you have a budget, you can figure out how much you can afford to spend on a loan each month. Do not go over that amount. If you need more money each month for your loan, you'll have to cut from somewhere else. I'm sure there's a subscription or three that you can do away with.

Likewise, you really need to decide if you need this loan or if you just want it for a brand new car. You also need to decide if you really need that new car or if a used one that is significantly cheaper would do just fine. Same goes for housing. Can you afford that house? Is there something smaller in the area that would work just fine? These are questions you need to be asking yourself.

Realizing That a Low APR Isn’t Always Good

A low APR might mean that you actually pay more over the lifetime of a loan compared to one with a higher APR. This can seem confusing since APR dictates how much interest your loan generates over the course of a year. So how is this possible? Time.

The period of the loan is equally as important as the APR. Ever wonder why car salesmen are more focused on how much you can afford to pay each month rather than the total amount of the loan and interest? This is a common tactic that takes advantage of people who are not financially savvy.

They'll change the APR, extend the loan term out, and do whatever they can to make it "affordable" despite costing thousands of dollars more. Sure, maybe your payment is $10 less a month, but at a 10% APR with a loan term of 96 months, you might have been better off paying slightly more each month with a shorter term.

Always take into account your APR and the term length. When in doubt, use a loan calculator to determine how much you'll be paying in interest to determine if you're being taken advantage of. Paying more each month with a shorter term is often the best way to avoid paying unnecessary interest.

Do a Trial Run

The last tip we will leave you with is do a trial run of paying the loan. If this is a far-off purchase like a house, or anything that you don't immediately need, calculate your estimated loan payment and set that money aside every month. Did doing so affect your budget? Did you have a huge expense that came up and prevented you from setting that loan payment aside?

If so, you really need to reconsider your finances and evaluate your budget until you have no problem with that extra payment in your budget. Once you get the loan, take that money you were saving and throw it at the balance.