Applying for Small Loans Online vs In-Person

Published on June 19, 2020 by Daniel Azzoli

Person looking at small loans online vs in-person on their computer

In today’s world, you can do almost anything from a computer screen.

Want to see the inside of The Louvre? There’s Google Maps for that.

Need to order a gourmet ingredient for tomorrow’s dinner? You may have to pay a price, but you can get it through express delivery.

Have a question about a clothing company’s return policy? No problem — in some cases, you can jump in an online chat with a customer service rep.

It only makes sense that the financial world gets in on the action by offering services and products online.

So now you have a choice. Do you get a personal loan or line of credit by visiting a financial institution’s storefront and asking for it in person? Or do you opt for getting modern small loans online?

While we can’t make this choice for you, we’ll lay the cards on the table. By the end of it, you may better understand how CreditFresh loans work, so you’re more informed about your options.

Online Lending is a Growing Option

Just as online grocery shopping and streaming services have exploded in popularity over the past 10 years, so too has online lending.

FinTech, which is a combination of the terms – “Financial” and “Technology” – refers to digital-only lending companies. This industry has grown to take 49.4 percent of the share of unsecured personal loan originations. That’s up from 22.4 percent over the past four years according to a recent Experian study.[1]

This means nearly half of all unsecured personal loans come from an online lender or servicer.

What is an Online Lender?

Simply put, an online lender is a financial institution that offers personal loans or personal line of credit loans over the web.

This may describe an existing financial institution that has a local storefront in your neighborhood. Some institutions with brick-and-mortar locations offer both online and in-person products and services.

That being said, when people talk about online loans, they usually mean loans offered through financial institutions entirely online. You will need to visit a website to request a personal loan or personal line of credit online.

More still, all the usual steps involved with the borrowing process — that is, signing a loan contract, receiving your funds, checking your account, and paying what you owe — happens online, too.

Some things can also happen over the phone, giving you an opportunity to speak with a real person if you have any questions.

Are You Ready to Be a Virtual Borrower? 

For some borrowers, requesting small personal loans online is a cut-and-dry decision. It makes sense for them to request, manage, and repay their loan or line of credit electronically. It’s fast and convenient.

But just because getting small personal loans online works for some people, doesn’t mean it will work for everyone. While convenient, there are a few things that you should look out for with mostly digital services.

That’s the nature of any financial product or service. They’re designed for specific needs and situations that may not extend to what you’re facing now.

So how do you figure out if getting small loans online works for your emergency? Here are some things you should consider before you take out a personal loan or line of credit online.

1. Are You Tech Savvy?

Perhaps the biggest question to ask yourself is this:

Are you comfortable going online to apply for a loan or line of credit?

If you aren’t familiar with how the Internet works, it may put the kibosh on borrowing money online.

frustrated woman looking up small loans online on her computer.

You need some basic technical know-how to navigate your way around an online lending company’s website, not to mention completing all the other tasks involved with managing your loan online.

More still, you need to have the skills to be able to compare your online options with some competence. For people who lack digital literacy, this may be a challenge — even if you know how to surf the web.

The American Library Association’s Literacy Task Force defines digital literacy as the following:

“The ability to use information and communication technologies to find, evaluate, create, and communicate information, requiring both cognitive and technical skills.”[2]

Digital literacy is more than just being able to correctly arrive at an online lending company’s website. It’s the ability to critically engage with the information you read once you arrive there. This helps you evaluate your options and avoid potential scams.

2. Do You Face Any Barriers to Getting to a Storefront?

Small loans online offer a quick and convenient way to get the money you need. As long as you have the Internet, you can request, receive, and repay a loan or line of credit over the web without ever having to leave your house.

This screen-to-screen service isn’t just a boon to the introverts who prefer to avoid human interaction — although that is certainly a plus if you’re shy!

Others who stand to benefit from this setup including the following people:

  • Borrowers who live far away from a branch. How long do you have to travel to speak with someone at a storefront location? If the nearest branch of your bank is far away, the travel time could be a difficult component to navigate.
  • People who rely on public transit. Getting to a brick-and-mortar location may be easy if you have a vehicle of your own. But if you rely on public transit with limited routes that do not connect you to a financial institution, it may not be so simple, convenient, or affordable.
  • Borrowers who work odd hours. Night or shift work may interfere with your ability to get to a storefront during its business hours.

Don’t worry if you don’t see yourself represented in the above list. The convenience of not going in-person is one of the many benefits of a personal loan that anyone may enjoy, regardless of your location, living situation, or needs.

3. Do You Appreciate Face-to-Face Communication?

In 2020, it’s in-vogue to use digital services at every opportunity — whether it’s ordering takeout from an app or requesting a line of credit from your computer.

This hands-off, do-it-at-your-own pace service is what tech-savvy people love. But if you prefer to speak with someone face-to-face, these benefits may not apply to you.

For some people, staring at a screen can be a nightmare. It’s a cold, impersonal, and isolating way to go about business.

While you may speak with someone about your account over the phone, it’s not the same as seeing someone in-person.

two women in white blouses smiling at each other while holding white coffee mugs next to white counter in red break room.

By comparison, an in-person loan or line of credit may give a more personal touch, especially if you already have a long-lasting relationship with your financial institution.

Being able to see the people who will fund your loan or line of credit may be a comforting offshoot of borrowing in-person.

4. What is Your Timeline?

Timing plays an important role in the decision to go online or in-person. If you need cash as soon as possible, getting small loans online may be the faster option.

Online financial institutions rely on technology that can automate many of the steps involved in the loan process. While you may still interact with a real human at every stage of your loan, this technology assumes the more time-intensive tasks involved with underwriting and approving your loan or line of credit.

For one thing, they have a system in place that allows them to receive applications 24 hours a day, seven days a week.

Compare this to brick-and-mortar storefronts, where you can only apply during their opening hours. More still, someone has to be available to review your application by hand.

Technology can also safely crunch numbers and perform simple tasks at a speed no human could replicate. What takes a computer seconds to complete may take a human being a day or more to do. As a result, you may receive word if you qualify within minutes of applying. 

This tech may also accelerate how quickly you receive and repay your funds. With an online loan, you may receive your funds as a direct deposit to a bank account you supplied in your initial application. You can also authorize automatic payments to come out of the same account to make sure you pay off what you owe on time.  

You won’t have to take time out of your day to pick up a check or an envelope of cash. The same goes for paying off your loan or line of credit. You won’t have to make a deposit at a storefront location.

5. What’s Your Credit History Like?

In some cases, your credit history may dictate the types of financial products available to you.[3] Some lenders look to this report — and your credit score — to assess your creditworthiness.

In other words, the state of your credit history may determine whether you’ll receive a loan or line of credit and at what rates. However, in some circumstances your credit history won’t affect the rates of a loan, but it may affect the amount you’re approved for.

Broadly speaking, people with good credit history have the greatest selection of personal loans or personal line of credit loans at the lowest rates.

But as you add bad credit history to your name, you may have fewer options, and you may pay higher rates.

Of course, this isn’t the only impact bad credit history may have on your life. But that’s a story for another post. Take a look at this article to see how bad credit can affect you in other ways.

When it comes to small loans online bad credit may not prevent you from getting what you need. Some online lending companies may take a more holistic view of your current finances that goes beyond the few data points your credit report may show.

Some lenders of small loans online may look at the following information to determine your creditworthiness:

  • Your cash flow. They may ask questions about your income and employment history to understand how much money you’ll earn during your loan’s terms. How much money comes into your hands and at what frequency may help them determine if you earn enough to cover your scheduled payments.
  • Your current debt. A large cash flow may not mean much if most of it goes toward existing debt and bills. That’s why some financial institutions may calculate your debt to income ratio to see if enough of your paycheck is left over to pay your loan or line of credit.

By including this criteria in their requirements, people with less-than-stellar credit may qualify for a loan or line of credit in an emergency.

To make sure this option continues to be the right option at every step of the way, take the time to maximize your line of credit or loan.

Find What Works for You!

By now, you should realize that there isn’t a one-size-fits-all answer to the question. What works for some people may not work for you. It’s your responsibility to dig deep into the subject, so you can determine what’s best for your finances.

What it comes down to is finding a personal loan or line of credit that satisfies these two things:

  1. It meets your needs within your timeframe
  2. You can afford to repay it by the terms of your loan agreement

It doesn’t matter so much that you go for an in-person or online option. What’s really important is that you go with whatever option that offers the best rates, terms, and conditions for your financial profile.

If you have any questions about CreditFresh, call us to learn more about what we do. A Customer Service representative is ready to help you discover your options.

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see CreditFresh’s Terms of Use. 


[1] https://www.experian.com/blogs/insights/2019/09/fintech-vs-traditional-fis-latest-trends-personal-loans/

[2] https://literacy.ala.org/digital-literacy/

[3] https://www.consumer.ftc.gov/articles/0152-credit-scores