Below, we give a rundown of the differences between online loans and bank loans, why online loans are faster as well as the pros and cons to consider.
What are bank loans?
In a nutshell, bank loans are personal loans offered by a bank or credit union. These loans are considered to be more traditional personal loans. Originally, before the accessibility of the Internet, all lenders were brick-and-mortar banks. In order to apply for a loan, it required the borrower to physically go into a bank and fill out the required paperwork.
While most banks also offer personal loans online, there are a few key differences between them and online lenders. For example, banks generally have stricter credit requirements and less advanced loan processing technology than online lenders.
What are online loans?
Online loans are personal loans offered by online-only lenders. These types of lenders are gaining more attention from Australians, particularly since the banking royal commission shone a negative light on the Big Four banks.
Typically, online loans are faster and easier to apply for than bank loans. Online lenders utilise advanced loan processing technology to streamline the application process. Most online lenders work with major banks that deliver instant transfers. For example, Jacaranda Finance delivered the first 60-second loan payout in Australia. If your bank supports New Payments Platform (NPP), you could receive your cash within seconds* of approval.
Why are online loans faster than bank loans?
Online lenders often process their loans within just 60 minutes, whereas banks can take between three to five business days to provide pre-approval to its applicants. Generally, online loans are faster than bank loans because they utilise more advanced technology to process their loans. For example, Jacaranda Finance leverages AI and machine learning to process parts of the application by machine. This eliminates the time needed for the human underwriter to process the loan.
Bank loans vs. online loans: which one do I choose?
In terms of speed, online lenders are typically faster than most banks and credit unions. If you are in need of emergency cash, an online loan may be your best option. Overall, each option comes with benefits and drawbacks.
To help you decide which one to choose, we’ve put together some of the pros and cons of bank loans and online loans:
|Bank Loans||Online Loans|
Keep in mind, this list is by no means exhaustive. Deciding which type of loan is better ultimately comes down to your own individual circumstances. If you can afford to wait a longer period to receive your money, won’t be restricted by early repayment fees, or require security on your loan, a bank loan may be better suited to you.
If you are in need of cash fast or have bad credit, an online lender may be your best option. Either way, there are an abundance of options available to you and doing additional research can help you find a lender best aligned with your requirements.
Is Jacaranda Finance the online lender you have been searching for?
If you are searching for a reputable, reliable, and fast online lender, you have come to the right place. Jacaranda Finance is an award-winning online lender that specialises in delivering quick loans to Australians in need of short-term financial assistance. They provide personal loans from $1,000 to $15,000 to assist you with life’s unexpected expenses. When you need cash quickly, Jacaranda Finance can deliver you with the loan you are looking for.
*Most approved applicants have their money in their bank account and ready to use within 60 seconds once they have accepted their digital contract.