Online Direct Lender Loans

A direct lender online loan is a short-term cash loan funded through direct private lenders rather than loan brokers or brick-and-mortar banks. Direct lenders like Jora have an easy online application process and can disburse funds in as little as 24 hours.

Since the process is so fast, many people use these online loans for financial emergencies. Just like with personal loans, you can use the funds for various reasons. For example, the money could pay for things like home repairs, legal fees, a family vacation, or a honeymoon.

Most online direct lenders have minimal requirements, which makes them more accessible to borrowers who can’t get approved for financing elsewhere due to poor credit or spotty credit history. Online loans may also appeal more to those who live in rural areas and don’t have other options nearby.

There are several types of online cash loans, including:

• Title loans: Also called vehicle title loans, these use your car as collateral and have a short repayment period.
• Payday loans: These short-term loans are small sums the borrower must repay by their next payday. Payday loans don't require collateral or a credit check, making them easy to get.
• Installment loans: These cash loans have longer repayment terms that usually span months or years. Some have higher eligibility requirements but may come with better interest rates.
• Lines of credit: These have a set borrowing limit, but you can use them as needed until you reach the maximum.

Borrowers usually repay these loans in monthly installments. You could also pay it off all at once, depending on how much you owe.

Keep in mind that these cash loans typically come with high interest rates. Combined with short repayment terms, these high rates can make direct lender loans more expensive than traditional options. If you find yourself regularly taking out short-term loans, it may be a sign of an underlying issue (i.e., difficulty budgeting). It could even lead to a debt trap if you’re not careful.

With that said, these loans can work well as a temporary solution when you’re in a financial pinch or need cash fast. Just make sure you have a plan and a budget to pay it back on time.

Taking out an online loan through a direct lender is fairly simple. Here’s how it usually works:

1. Determine what you need and why. Some online lenders require you to indicate how much money you need and the purpose of the funds. In other cases, you might also need to specify how long you’ll need for repayment.
2. Complete a simple online application. This step usually takes 5-10 minutes, though some direct lenders have more involved applications. You’ll need to provide some personal and financial details. This information might include your date of birth, social security number, contact info (i.e., phone number and email), mailing address, income, and employment information. You may also need to provide banking details so the lender can disburse the funds if approval.
3. Wait for the lender to review your application. The lender will look over your application and either approve or deny it. This process can take anywhere from a few minutes to several hours. Some lenders will run a hard inquiry (credit check) that can temporarily lower your credit score by a few points.
4. Accept the loan offer. If you’re approved, review the loan offer to make sure the terms and loan amount align with what you need. Only sign for the loan if everything looks right.
5. Receive the funds. Once approved, the lender will usually disburse the funds through direct deposit. Some online lenders have storefront locations too, so you may be able to pick up the cash in person. Fund dispersal is often fast – sometimes within 24 hours of applying or on the next non-holiday business day. Jora, for example, offers same-day funding if you accept a loan offer by 10:30 am CT (Monday through Friday).

After the money is in your account, you can use it as intended. Just make sure you repay the loan on time to avoid any additional charges like late fees. Depending on the terms, you can either pay in a lump sum or monthly installments. Also, avoid taking out more than you need so you don't have any trouble repaying the loan.

Like bank or credit union loans, online direct lenders can approve and finance loans. However, they do stand out from traditional lenders for the following reasons:

• More Lenient Eligibility Requirements: Direct lenders are usually more flexible with their eligibility requirements. They’ll often work with individuals with poor credit or spotty credit history, especially if they have steady, verifiable income.
• Less Regulation: Loans obtained through a direct lender online are often less regulated than traditional banks. This could mean higher interest rates and more service fees.
• Shorter Application Process: It usually only takes a few minutes to complete an online loan application with a direct lender. This process is much faster than with most traditional lending options.
• Quicker Approval: Banks may take days or weeks to approve a loan application, whereas direct lenders may be able to disburse funds within 24 hours.
• Increased Flexibility: Online loans from direct lenders are often more flexible and customizable than bank loans.
• No Prior Financial Relationship Required: You can borrow from a direct lender even if you don’t have a prior relationship with them. Some banks and credit unions only work with people who already have a checking or savings account with their institution.
• Increased Accessibility: Direct lenders online are more accessible to people living in rural areas and the 5.9 million Americans who are unbanked (don’t have a checking or savings account with a bank or credit union).

One potential downside is that direct lenders usually offer smaller loans than banks. However, this depends on the online lender and the individual’s credit score and income.

Not all direct lenders are created equal. Some offer loans in higher amounts or have stricter eligibility requirements. Things like online reputation and customer support vary, too. With that in mind, here are the main things to keep an eye out for when choosing a lender.

There are different types of online cash loans, including payday and title loans. Although you can use all of these to pay for something unexpected or small, some direct lenders only offer certain types of financing. Check what the lender offers and make sure it works with your situation.

Eligibility Requirements

Although direct lenders often have lower eligibility requirements, your options may still be limited based on certain factors, such as:

• Credit score and credit history
• Income
• Debt-to-income ratio (how much of your monthly income goes toward your debts)

Your credit score depends on several factors, including payment history, credit utilization, and credit mix. The better your credit score, the higher your borrowing power and the better your terms. Here are the ranges for FICO:

• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very good: 740-799
• Excellent: 800-850

Many direct lenders will consider your complete credit and financial profile when making a lending decision. However, some don’t check your credit at all.

Even if the lender doesn’t require a credit check, you should still keep track of your score. After all, you never know when you might need to apply for another form of financing, such as a mortgage or line of credit. If possible, get a copy of your credit report and review your score before applying for a loan.

Most small online loans – including payday and title loans – don’t allow for a co-signer. However, if you’re applying for a larger loan and don’t qualify on your own, check if the lender accepts co-signers. If they do, this could improve your chances of getting the loan you need.

Online loans from direct lenders are often flexible to help borrowers who need money now. Many also have customized terms and amounts based on the individual’s situation.

Interest rates can also vary widely. For example, a personal installment loan from SoFi has a fixed APR of about 15.71% with good credit and a 60-month term. A title loan, meanwhile, has an average APR of 300%.

Check what the lender offers and see if it fits your needs. If it’s not an emergency, shop around until you find the best option for you. In the case of an emergency, choose a reliable lender that is transparent about its rates and terms.

One of the main reasons why people go through direct lenders for quick loans is because they have convenient applications and fast funding. Check the lender’s homepage or FAQ page to discover how long it typically takes to receive cash.

Some direct lenders take longer to approve applications, especially if they need more information or if they have to verify something. If you need money immediately, go with a lender that can approve and disburse funds within 24 hours. Lenders typically outline the application process and any timelines. For example, Jora asks that you submit a simple online application and choose how much you need. Depending on what time you apply, you could receive funds the same day.

Some direct lenders charge additional fees, such as:

• Interest
• Origination fees
• Prepayment penalties (charged when you pay off a loan before the due date)
• Late fees
• Other service fees

See if the lender has any of these and calculate them into your budget before taking out a loan.

It’s always wise to check the lender’s online reputation before sharing any information or applying. Check what people say about them on websites like the Better Business Bureau (BBB) and Trustpilot. Look out for reviews that mention:

• Unsecured website or application
• Spam emails or calls after sharing information
• Unresponsive customer service
• Fraudulent or inaccurate information on the customer’s account
• Repeat debit card or bank charges

If you can’t find the reputation of the lender you want to work with, or if they don’t seem to have any testimonials, it could be a red flag.

Even though they’re online, direct lenders should have a customer support team available to help you throughout the loan process. Find out where, when, and how to contact the lender before doing business with them.