Being in the loans market for over five years and dealing with consumer concerns on a daily basis through our call center operations has taught us that applying for a personal loan online does not always feel like the easiest or safest thing for our customers, thus raising many concerns. We do our best to address these concerns, but there are some that keep resurfacing. Because we want to help all consumers that want to apply for a personal loan make an informed decision, we have put together a list of top five concerns consumers have about online personal lending:

1) What are the requirements to apply for a personal loan online and how does it work?

In order to be eligible for a personal loan, an applicant must first meet a few requirements. These requirements vary from lender to lender, but there are some minimum criteria that you have to fulfill regardless of who the lender is. First of all, you have to be over 18, be a citizen or legal permanent resident of the United States, and have a valid Social Security Number. You will also have to prove that you have a regular source of income, whether that comes from full-time employment, self-employment, pension, disability benefits or social security income. If you are self-employed, you will need a 1099 or W-2 tax form or bank statement in order to verify your self-employment income. If you’re from Illinois, you will need paystubs if you’re employed, 1099, W-2 or tax returns if you’re self-employed, and 1099, W-2, tax returns or benefits statement if you’re on Benefits.

Also, a valid checking account is required in order to be eligible for a personal loan due to the fact that the funds are deposited directly if the loan is approved. Last but not least, an applicant’s credit history will also be checked in order to make sure the applicant is financially responsible and able to take out more debt. To show such a pattern of responsibility, a customer must not have: active or recent bankruptcies (discharged more than 6 months ago), any accounts more than 60 days late, any recently charged off accounts, more debt than can be covered through current income, and must not be showing a pattern of late or missed payments.

Once these requirements are met, applying for a personal loan online is easy. You just have to fill out an online application where you will be asked to choose the amount you want to borrow (between $1,000 and $25,000), as well as the timeframe you want to keep the loan for (between 12 and 36 months). This step will also require you to fill out personal information as well as income and bank account details, and your social security number. You will find out if you’ve been pre-approved in a matter of seconds. If you get approved, the money will be directly deposited into your checking account and the exact funding time will depend on your bank. Generally, if your application gets approved before 6pm Central Time Monday through Thursday, your funds will be deposited in your bank account the next business day, and if it gets approved between 6pm Central Time Thursday and 7pm Central Time Sunday, you'll receive your funds on Monday. You will then repay your loan in simple bi-weekly or monthly payments that will be electronically debited from your bank account on the date you agreed upon with the lender.

2) What are the rates and fees on a personal loan?

Rates and fees vary from lender to lender, but the interest rate for personal loans usually goes between 11.24% and 35%. Personal loan costs vary based on several factors both related and unrelated to the applicant. The cost of a personal loan is affected by the sum of money you wish to borrow, as well as the period of time you will keep the loan. The credit score of each individual customer is also taken into consideration. A perfect or near perfect credit history will increase your chances of getting the lowest possible interest rate on the personal loan. The amount you borrow and the APR will also depend on the State you live in, so make sure to check out the specific rates and terms for your State.

Lenders normally don’t apply prepayment penalties or additional charges for early payments on personal loans. You will have the option to pay the loan in full before the due date and only pay the interest rate for the period the loan was outstanding.

3) What credit score is required to be approved for a personal loan? Can an applicant apply with bad credit?

A perfect credit score is not required in order to apply for a personal loan online. Customers with a less than perfect credit record may also be approved for loans. However, a credit history that shows a pattern of responsibility and ability to take out more debt is required. The minimum credit score necessary for a customer to be eligible (also called the “cutoff score”) varies from lender to lender, but credit scores somewhere between 580 and 720 are generally considered good enough. This however does not mean that approval is guaranteed if your credit score is within these values, nor does it mean that a credit score below 580 will definitely be rejected, but if your credit score is within these values your chances of getting approved, especially for a lower interest rate loan, are higher.

4) Will an applicant’s credit score be affected when applying for a personal loan?

First of all, you have to keep in mind that not everyone applying for a loan will get a credit check. Second of all, lenders will do as many internal checks as they can prior to paying an underwriter for credit checks. However, if the internal checks are not sufficient to verify the reliability of a customer, then a credit check will be run, but this will not necessarily negatively impact their credit score, as lenders perform lot of soft pulls/checks before hard checks. Basically, looking for the best rates for a certain type of loan (like personal loans) will not affect significantly your credit score, especially if you find a loan within around 30 days. In that case, all the inquiries made into your credit score within that timeframe will only count as one. This time span depends on what version of the scoring formula is being used: 14 days for older versions and 45 days for newer versions.

5) Is it secure to apply for a personal loan online?

We understand how applying for a loan online may not always seem like the safest option, but there are various methods to check out the trustworthiness and safety of a personal loans website. First of all, check to see if the webpage that requests your personal information has an SSL certificate. You can do that by clicking on the safe and secured symbol in your browser near the URL. The "https" code at the beginning of the URL is there to attest the security of a website. This certification ensures that the information you provide on the website is secured and protected through a series of encryptions. Second of all, check to see if the website has other security seals such as McAfee or GoDaddy that can also ensure data encryption and malware scanning. Make sure to also check their data collection policy and any information they have on responsible lending. They should at least specify that more delicate information, such as that related to your bank account, is kept private and is not collected.