If you’re considering an online direct loan to help with an unexpected emergency expense, it’s crucial you know what you’re getting into before you apply. While there are many benefits to online direct loans, they can give you a financial headache if you misuse them.

To help you decide if they’re the right option for your emergency, here are some pros and cons of online direct lender loans.

Pro #1: Convenience

Online direct lenders are all about streamlining the borrowing experience. They do this in three major ways.

  1. They’re online: As web-based lenders, they don’t require you to make in-person meetings with an advisor. You can do everything from your spot on the couch with a mobile or laptop in hand, including applying, receiving funds, and repaying what you owe.
  2. They remove unnecessary parties from the process: Online direct lenders are responsible for your loan from start to finish, which means you won’t interact with another company, broker, or financial institution. This makes it easier for you to keep communications organized, as you’ll only have one point of contact throughout the entire process.
  3. They spread out your repayment. Installment loans direct lenders break down your repayment over multiple payments. The online loans monthly payment schedule may be more convenient than loans that are due back in one lump sum.

Pro #2: Quick Application

When a gasket blows in your car or your child is sick, you don’t have time to spare before you’re off to the mechanic or doctor’s office. Online direct lenders understand the urgent nature of these financial emergencies, so they’ve created a simple and straightforward application to get you started.

Because online direct lenders don’t rely on other companies to approve or underwrite your loan, they can make decisions in-house relatively quickly. The faster you learn if you qualify, the faster you can move onto the next step.

Con #1: Internet Dependent

For most people who rely on technology every day, the online aspect of these personal loans is their biggest perk. But for the following people, it can be a major drawback.

  • The underbanked: People without a bank account can’t send checks or arrange automatic payments when it comes time to repay what they owe.
  • People without Internet: Some 33 million Americans don’t have reliable access to the Internet. While they may use computers at a library or Internet café, these public devices aren’t a secure way to share confidential financial information.
  • People Who Appreciate Face-to-Face Interaction: If you prefer to speak with someone face-to-face, online direct lenders may not be for you. While you will have a chance to speak with someone over the phone, most of your borrowing experience will happen over the screen.

Con #2: Cost

How much a personal loan costs you in the end depends on the rates and terms, which vary greatly depending on the financial product, your lender, and your financial profile.

If you have stellar credit, you may not have much to worry about, but if you’re a subprime borrower, you may end up paying more.

Bottom Line

Like most things in life, there are pros and cons to borrowing. Now that you know some of them, you’re in a better position to determine if these loans are right for you and your emergency.