When applying for a personal loan, most people prefer following the traditional route: visiting the bank, signing the application papers, and completing the required process. However, with the increase in demand for personal loans, many new lenders have entered the market who offer loans online! Some of them give instant approval and much lower rates. But is it safe to apply for a personal loan online? Well, while some phony companies are waiting to dupe you, there are legitimate and safe online vendors too. Here are a few points that will help you identify the right lender.

Check the regulatory requirements
Online lenders have to comply with about 19 Federal and State laws, ranging from fair practices, privacy protection, safety for collaterals, fair disclosure, and so on. So, while doing your research, verify if every company on your list has obtained the required licenses from the respective state agencies to conduct online lending business. To be 100 percent sure, check for permits on the lenders’ official website and verify the same on your state website.

Watch out for the office address
Even though they are online businesses, online lenders should have a physical address listed on their website. So, ascertain if such an address exists to safeguard yourself from cheaters. If they do not have an address mentioned, they are most likely illegal, and you should refrain from applying for a personal loan through them.

Verify online
The best way to ensure you are dealing with a legitimate company is to verify them online and read their reviews. Many online websites and nonprofit agencies like Better Business Bureau and Consumer Finance Protection Bureau verify and rate companies based on their trustworthiness. Look for these ratings and do more research about these lenders. Only select those whose record looks clean and sound. It could be a leading Fintech or an upcoming start-up.

Look for red flags
Once you have shortlisted a few lenders, connect with them, understand their eligibility requirements, and match them with your numbers, financial needs, and budgets. Sometimes, just interacting with them can give you a hint of their ulterior motive, if any. You will come across options whose requests are unlawful and unrealistic. An alarm bell should ring in your mind if:

• You receive a call even as you are searching the internet.
• You receive spam emails and texts for personal loans even before you inquire.
• There is a lack of data regarding the firm’s federal or state licenses online.
• You are unable to verify their offices in your state.
• Your search marks their website as unverified, or your antivirus package denies permission to visit their website.
• Better Business Bureau and other similar sites do not have a good rating for their trustworthiness.
• Online reviews are not good, or there is news about unfavorable business practices or lawsuits against them.
• You have established contact with them, and they begin spamming you with calls or emails.
• They ask for payment of loan processing costs upfront.

They guarantee loan approval even before you submit your documents.

No doubt, picking the right and quality lender for a personal loan is an overwhelming task. Still, you must shortlist probable companies carefully. Applying with too many lenders will result in an equal number of hard inquiries on your credit report, and it will reduce your credit score by that many points. Therefore, it is vital to have a few trustworthy and authenticated lenders on your final shortlist. You have to apply for a loan only with such companies. So, take your time to decide and consult as many people as possible before making that all-important decision.