Online loans: what you are really comparing
Online lenders offer everything from 28% credit union loans to payday loans above 400% APR. The application looks the same either way, so the only way to know what you are getting is to read the finance charge, the APR and the license.
The short version
- The loan type and your state decide the price, not the website.
- A lender must be licensed in the state where you live.
- Lead-generation sites collect your details and pass them to lenders.
- Never pay a fee before you receive a loan.
On this page
The loans you will find online
| Loan type | Amount | Repaid over | Typical APR |
|---|---|---|---|
| Credit union or bank personal loan | $500 to $50,000 | 1 to 5 years | 8% to 28% |
| Online installment loan | $500 to $5,000 | 3 to 24 months | 36% to 300%+ |
| Payday loan | $100 to $500 | 2 to 4 weeks | 300% to 700% |
| Tribal loan | $300 to $3,000 | 6 to 24 months | 200% to 800% |
Two sites that look alike can sit at opposite ends of this table. The agreement tells you which one you are dealing with: federal law requires every lender to state the finance charge in dollars and the APR before you sign.
Lender or lead generator?
Many loan sites do not lend. They are lead generators: they collect your application and pass it to lenders and other companies that pay for it. That is legal when disclosed, but you should know it before you type in a Social Security number. Look for the name of the actual lender, a state license number and a privacy policy that says who receives your data. Northlight, for the record, is neither: we publish information.
How to check an online lender
- Find the license. Search the company on your state regulator’s website or on NMLS Consumer Access.
- Read the disclosures. A real offer shows the finance charge, the APR, the payment schedule and the total of payments.
- Look for a physical address and a working customer service line.
- Search the name together with “complaint” and check the CFPB complaint database.
- Walk away from upfront fees. Legitimate lenders deduct fees from the loan or add them to it.
What lenders look at
Online lenders verify identity, income and your bank account. Some pull a full credit report; short-term lenders more often use specialty databases. Either way, an advertisement cannot tell you whether you will be approved or at what price.
Funding times
After approval most online lenders send money by ACH, which arrives the next business day or the one after. Some offer instant payment to a debit card. Applications finished late in the day, on weekends or on holidays wait for the next banking day.
What an application should and should not ask for
A real application asks for your name, address, date of birth, Social Security number, income and the bank account where the money will go. That is sensitive information, so enter it only on a site whose owner and license you have checked.
No legitimate lender asks for your online banking password, a payment before funding, a gift card number or remote access to your phone. If a form asks for any of these, close it.
Check the rules where you live
Rates, loan sizes and even the legality of some loans change at the state line. Start with your state’s page, then compare installment loans, payday loans and lower-cost alternatives.
Common questions
Are online loans safe?
Loans from lenders licensed in your state are regulated like any other loan. The risk comes from unlicensed lenders and from sites that sell your details, so verify the license first.
Can I get an online loan with bad credit?
Yes, though usually at a higher price. Installment and payday lenders weigh income and bank history heavily. No lender can promise approval before reviewing your application.
How fast do online loans pay out?
Commonly the next business day. Timing depends on when you are approved and on your bank’s processing; weekends and holidays add a day or more.
What is a lead generator?
A website that collects loan requests and passes them to lenders or other buyers. It does not make the loan, and its disclosures should say who receives your information.
Does Northlight lend money?
No. Northlight is an information site. We explain costs and state rules; we do not make loans or credit decisions.
Check the rules where you live
Whether you can borrow, how much, and what a lender may charge all depend on your state.
Sources
Keep reading
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- No credit check loansLenders that advertise no credit check loans still verify who you are and whether you can repay. Learn what they check, what it costs and safer options.
- Payday loan alternativesEight alternatives to a payday loan, from credit union PALs at 28% APR to assistance you never repay, with costs and how to apply for each.
- Need money nowNine realistic ways to get cash quickly, ordered from free to most expensive, with what each costs and how fast the money usually arrives.
- Payday loan debt helpStuck renewing payday loans? Learn how extended payment plans, consolidation loans and nonprofit counseling work, and which relief offers to avoid.
- Installment loansInstallment loans spread repayment over months instead of one payday. Learn what they cost, how rates vary by state and how to compare offers.