3 Ways To Find Online Installment Loans
Online installment loans are a fast and simple means of obtaining financing for millions of small businesses. These quick cash infusions serve a wide range of business uses, from debt refinancing to working capital. Unlike some other types of financing, installment loans (also sometimes called “term loans”) have a traditional and easy-to-understand structure; you’ll receive a lump sum that is repaid in fixed, periodic increments.
However, you shouldn’t accept just any installment loan you find in an online search – you should only take one with fair terms and a low interest rate. What follows are some good ways to find an online installment loan, along with the pros and cons of each one.
Table of Contents
1. Employ An Online Loan Broker
A loan broker is someone who looks for and finds an appropriate loan for you in exchange for a fee. Usually, you’ll only have to pay this fee if you accept the loan offer. Commercial loan brokers have been around for many years, but many online-only loan brokers have cropped up in the past decade or so (coinciding with the emergence of online lenders).
The purported benefit of using an online broker is that you are saving the time it would take to hunt down a loan yourself. Loan brokers may also be able to secure a better loan offer (with, for example, a lower interest rate) than you’d be able to get on your own.
On the flip side, there are some potential downsides when it comes to using an online loan broker. First, the fee charged may not be equal to the broker’s actual value. Some loan brokers charge fees as high as 20%. In some cases, as described in this Forbes blog post, the interest rate a broker secures you might be even higher than the rate you could get without their help; in such scenarios, the broker might add a 15% markup to the lender’s going interest rate – and pocket that difference as his “finder’s fee.”
If you do decide to use an online broker, make sure you do your due diligence and select one that has a good reputation.
2. Find A Loan Aggregator
An online loan aggregator is similar to a loan broker, but there are some important differences. Like a broker, a loan aggregator will help you find an online business loan. However, they will not charge you (the borrower) a fee; the fee is charged to the lender.
Loan aggregators essentially provide matchmaking services; they take your business’s lending profile and then match you with suitable loans. This way, you can compare various loan offers and select the best one. With multiple lenders competing for your business at once, you might be able to secure a really good deal. You’ll also save time by filling out just one loan application and getting pre-qualified by multiple lenders at the same time.
As you would with an online broker, you’ll want to research the aggregator website to make sure they have a good reputation and aren’t suggesting bad lender(s) for their own financial gain.
Merchant Maverick has partnered with Mirador Finance, a financial technology company, to offer one such service: the Merchant Maverick Community of Lenders. With just one application, you can check your eligibility with banks, credit unions, nonprofits, and other lenders across the United States. Other popular loan aggregators include Fundera (read our review) and Lendio (read our review).
3. Use Online Loan Review Sites
This means of finding an online term loan might sound like the most tedious, and let’s be honest: it is. You’ll have to use your own judgment to determine whether a review site is reputable and then use your noggin again to weigh the strengths and weaknesses of different online lenders.
Then again, you’re reading one of those review websites right now, so you’ve already done half the work! In addition to small business loan reviews, which you can sort by name or rating, we also have some other useful tools for finding the best online loans, including a small business loan comparison chart, a small business loan buyers guide, a small business term loan calculator, and hundreds of blog posts about online loans – like the post I recently wrote comparing the going rates from the top online business lenders.
Okay, enough horn tooting. While we pride ourselves on our unbiased reviews of online loans (you can read about how we make money while remaining unbiased here), you should always cross-check our research with other loan review websites as well. Make sure you also check the status of any online lender you’re considering on the Better Business Bureau so you can see their rating and read customer reviews.
It used to be that the only way to get an installment loan for business was to apply for a hard-to-get bank loan. But over the past couple decades, the online revolution has significantly expanded the average merchant’s ability to obtain business capital through non-bank sources. Online financing options can carry certain risks, however. When evaluating online loans, you need to be careful to avoid predatory brokers and myriad online loan scams; certain online lenders themselves are also accused of being predatory.
If you’re already looking at some online installment loan options and want my thoughts on a particular online lender, leave me a question in the comments and I’ll do my best to get back to you with an answer.
Want to compare loan offers right now? Apply directly through the Merchant Maverick Community of Lenders.