The Pros and Cons of Dealing with Online Direct Lenders

If you’re fielding a surprising expense or emergency repair without savings in the bank, taking out money is likely on your to-do list. Plenty of financial institutions may be willing to grant funds to help you weather your financial storm, including online direct lenders.

Man finds online lenders

But before you get a loan online from one of the many online direct lenders operating today, you’ll want to know why you’re choosing them over all the other financial institutions. Keep scrolling to learn more about this option, so you can make an informed decision about your loan.

What Are Online Direct Lenders?

One quick way to define these financial institutions is by what they are not. Online direct lenders are not brokers, affiliates, or some other third-party that matches you with a loan.

In other words, there are no middlemen involved. They single-handedly review applications, fund, and service their financial products.

So, if you decide to borrow from a direct lender, you can expect to work with them and only them at every stage of your online loan — from the initial application and underwriting process to the disbursement and repayment of your funds.

The Pros

Here are some of the most common advantages to partnering with an online direct lender.

  • Uncomplicated: Dealing with just one lender every step of the way can take a lot of stress off your plate. You won’t have multiple financial institutions complicating things, so you’ll find it easier to keep track of the important things, like your due dates!
  • Conveniently Online: With a name like online direct lenders, these financial institutions do everything over the web. That means you won’t have to take time out of your day to make it to a storefront location to apply or repay your funds.

The Cons

There are always two sides to every coin, so for every pro, there is a con. Check them out below.

  • It Takes Tech: Without a private computer and a reliable connection to the Internet, they may not be a convenient option for you. Although you may have access to both these things at a library, think twice before using a public computer to apply for funds. They may expose the personal information you need to share in your application.
  • High APR: Online direct lenders represent a huge group of financial institutions that provide a wide array of products with varying terms. Some might have relatively low interest rates, while others may have three-digit APRs. It depends on your credit score, as well as other financial factors.

Borrowing with Bad Credit

If you’re borrowing with a less-than-perfect credit score, your options may come down to a direct lender payday loan and an installment loan. Both offer small sums and carry similarly high interest rates, but they offer different repayment plans.

  • A direct lender payday loan is due back in one lump sum by your next paycheck, which is generally two weeks for most borrowers.
  • A direct lender installment loan gives you some wiggle room. You’ll pay it back over multiple payments, giving you weeks or even months to generate the funds.

Because of the difference in terms, you should consider your budget carefully when you’re deciding between a direct lender payday loan and an installment loan.

Bottom Line

Online direct lenders are like any financial institution. They come with the good and the bad. It’s up to you to decide which one outweighs the other. You can do that by comparing rates and reviews carefully, focusing on finding an affordable option with reasonable terms.


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