With the imminent recession coming here in the states, I know many of our readers are looking to find some way to borrow money to pay of credit card bills or debt. Every other commercial on television which is specifically targeted to the middle class is about borrowing money online and “comparing rates”. Trust me, don’t buy it. As many people have successfully borrowed money online and haven’t had any problems, there are still some areas of caution.

Eloan and Proressive are fine. Progressive actually has offices in many cities where you can walk in and talk to a person face to face. Eloan, not so much. Google the term “online loan” and try not to laugh. If you don’t laugh, you scam proned. Most of us know to stay away from the “Pay Day Advance” centers such as MoneyCorner as they have always charged outrageous interest rates that banks typically don’t do.  These traps also have websites that promise anyone an easy way out of a short debt crunch. Look at the picture below for many of these traps:

If you honeslty would trust any of these websites, I wish you all the luck and strongly suggest you subscribe to our RSS feed.

On top of that, an intra-personal relationship with a bank is invaluable. Think of it this way…would you rather have an online website charge you an outrageous interest rate and not have any brick-and-mortar offices or would you like the personal touch of actually talking to someone at a bank or financial brokerage about your loans and the risks involved? Me, I’ll take the bank.

There are other benefits as well. One of which is to have an oppurtunity to increase the amount of your loan or to achieve a lower interest rate by negioating with the lender at the bank. They may see you as having mediocre credit but you speak well and have on nice attire. Or, maybe you drive a nice car that you could put on as leverage. Wouldn’t you agree that you would feel more comfortable knowing your lending agent that having a fun time paying off an online sever? The lenders what to know who you are, what job you have, what your mortgage is, and if you seem like a honest and trustworthy person and ditto with you finding out the same of the lending agent.

I could almost guarantee that these shady online lenders have overseas telephone support and most of them are in another realm of lending as they are dealing with their business transactions completely online.

This post has just been a word of warning as I just feel that the online lenders aren’t my cup of tea and an actual bank is a better route. Regardless, good luck and pay that bill on time!

If you liked this post, please subscribe to Money Management And You's RSS feed.

Filed under: Debt, Due Diligence