Do you need financing to buy a vehicle or pay a higher bill than expected? Do you want to open a small business and need money to deal with expenses?
Currently there are endless financing possibilities available to the user, through the internet and without leaving home.
However, among so many and varied options, it can be difficult to find the financing solution that best suits your needs and your personal situation.
Online personal loans and credit lines are two very popular and very different financing solutions, so it is important that you know the conditions, advantages and disadvantages of each of them before deciding.
The objective of this article is to introduce you to the characteristics of personal loans and credit lines and help you determine in which situations it is a good idea to apply for one or the other.
Do you want to know more about the two options, and know which one is better for your situation? We show you a visual guide to help you in your decision.
What is a personal online loan?
An online personal loan is a financing product whose application is submitted completely through the internet, without the need to attend meetings, answer intrusive questions or present a large amount of paperwork.
The fact that it is defined as a personal loan refers to the fact that the lender will not request the presentation of a guarantee of payment (such as a guarantee or a dwelling) but that this will be the person of the applicant and his present and future assets.
This means that, to grant you a personal loan, the lender will not require you a guarantee, but will take into account your economic situation, such as your income and your monthly expenses, to assign a risk factor to you.
This risk factor will determine the risk of default associated with granting you a loan, therefore, it will determine if your application will be approved or not, and if it is, it will influence whether your loan interest will be higher or lower.
The vast majority of online loans are considered personal loans, since in very few cases the entities request the presentation of a guarantee as payment guarantee.
In terms of its characteristics, in general, the maximum amount to be requested with an online loan is somewhat less than the amount offered by conventional banks, as well as the duration.
However, this is due to the minimum requirement of requirements and documentation imposed by online entities compared to conventional banks.
On the other hand, the interests associated with online loans are generally similar to those of bank loans, excluding urgent online loans or with ASNEF, as these will have much higher interests.
What is a line of credit?
While an online loan is defined as a fixed amount of money that is transferred to the user in a single payment and for a certain duration, a line of credit is a financial product that does not have a fixed amount or a fixed payment.
A line of credit is an open account with a limit amount that the user can have where and when they want.
Thus, the user can go to the credit line to make use of the money he needs for a set period of time (usually one year) until he reaches the credit limit, paying only for the amount of money used.
However, it should be remembered that in addition to paying an interest for the amount used, the borrowing entity will request that you pay certain commissions for the total amount you have.
Which of the two options should I choose for my situation?
Only you can decide which is the best option for you depending on your financial situation as well as the purpose of the money. However, there are certain cases in which one of the options may be a better idea.
For example, it will be a good idea to apply for a personal loan online when we have a fixed amount in mind, that is, when we have information on how much money we need and we are clear about what we are going to use that money for.
Thus, when we want to pay a bill, pay for a repair or buy an expensive household appliance, applying for a loan may be a better option.
On the other hand, we must request a loan if we do not know the amount of money we need, or if the payments are going to be constant for a period of time.
This will be the case if we want, for example, to make the payment of a reform in our house or we are going to open a small business that needs constant financing.
What are online mini-credits or microcredits?
Online mini-credits or microcredits is a type of financing that is granted exclusively through the internet and that grants a reduced amount of money to a particular person.
Thus, online mini-credits are characterized by:
- 100% online form management
- Maximum amount around $ 300
- Fast and no queuing process
This type of financing is convenient for people who need to get a low amount of money quickly, whether due to an unexpected breakdown of your vehicle, an extra monthly payment, etc.
Online mini-credits or microcredits may be accepted by the bank in minutes and therefore, make it possible to receive the money in less than an hour after the request.
Is a mini-loan and a mini loan the same?
Both, both a mini-loan and a mini loan, help finance money for a particular person and more specifically, especially low amounts of money. Instead, they are not the same.
The mini-loans grant smaller amounts than the mini loans not exceeding $ 300 in most cases. Thus, if you request a mini loan you can finance an average of $ 750.
It is important to mention that neither is more convenient or better than the other. This will depend on the personal situation that each client has, the money they want to finance, the return period, etc.
We recommend using the loan simulator that you can find on the website corresponding to each bank offered by Matchbanker and, thus, calculate interest, return fees and other details.