by Ben Sweiry ·
Modified on 19 October, 2023
When you’re looking for a short-term personal loan to cover some unexpected expenses, or to tide you over with that extra little bit of cash until your next payday, the first thing to note is that there are plenty of options for you to choose from.
As long as you’re a resident of one of the 37 states where payday loans are legal, you’ll likely have the option to go to a physical store, or you could alternatively use an online lender to get your personal loan. Dime Alley acts as a broker for our trusted online lenders, who provide an assortment of different financial products to suit your personal needs.
This guide will provide some balance and weigh-up the positives and negatives of using online versus in-store personal loans.
Online vs In-Store: Key Facts and Stats
- In general, 62% of U.S. shoppers say they shop more online now than they did before the pandemic, which includes shopping for financial products like personal loans.
- According to a study by credit bureau, Experian, Fintechs originated almost half of unsecured loans in March 2019, up from 22.4% in March 2015.
- The more modern option of an online lender can get you a loan virtually overnight, if you qualify. Dime Alley loans take anywhere from 1 to 24 hours to appear in your account, should you qualify.
What are the differences between Online and In-Store Loans?
Pre-Qualification
The primary considerations when shopping for a loan should be its rate, fees and terms, rather than whether it’s from an online lender or a bank branch. Some online lenders let you pre-qualify and see your potential rate, which is helpful information to have as you shop around.
Online Lending Brokers
When you use online services to apply for a loan, there is the option of using a broker. With an online lending broker, you apply to a company that then uses your information to help you shop around for a lender willing to extend a loan that satisfies your requirements.
Lending brokers are useful because they can sometimes match you with lenders you may not reach out to otherwise, and save you time in finding competitive rates in your local area,
Licensed Lenders
When you apply with an online lender, confirm that the lender is licensed to do business in your state. It should say so on your lenders website.
It is also important to keep in mind that laws regarding payday lending vary from state to state. Payday loans, for example, are actually prohibited in 13 states across the US, including Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia, and the District of Columbia.
Advantages and Disadvantages of Online Loans
Advantages
- Online lenders typically offer pre-qualification that doesn’t impact your credit. This is through the use of soft credit checks.
- Going online to get a loan usually leads to faster loan approval and disbursement, sometimes within the same day.
- Online lending gives you the option to use a broker. Lending brokers are useful because they can sometimes match you with lenders you may not reach out to otherwise.
Disadvantages
- Fully online loan application and approval process means consumers must be comfortable submitting forms and personal financial information with minimal personal interaction.
- Managing a loan online, which typically means that your only contact with the lender is via a customer service representative, can prove challenging for folks who aren’t financially or technologically-savvy.
Advantages and Disadvantages of In-Store Loans
Advantages
- Having a pre-existing relationship with a lender in-person could mean higher approval odds, lower rates or more favorable terms.
- Face-to-face personalized service could be better to help you through the application and loan management processes, particularly if you’re not as tech-savvy or have minimal access to the internet.
Disadvantages
- Typically, in-store loans offer no pre-qualification process which lets you see loan rates and terms without impacting your credit.
- Loan approval and disbursement may take several days or longer – far slower than the speed of online loans.