There are a lot of good reasons to consider going with an online lender. Many online lenders offer fast quotes and lower interest rates than your average brick-and-mortar bank, making it easy to shop around and get a good deal. Online lenders give borrowers many more options than the bank where they have checking and savings accounts.
But online lending is still relatively new—and it’s especially important for customers to be able to trust the banks with which they do business. If you’re looking for an online lender, here are a few things to look for to determine how solid and trustworthy they are.
Look for the lock and key
Reputable online banks are meticulous about protecting their customers’ data—because they know they live and die by it. They should be encrypting your data; the web address window of your browser should show a key or lock icon when you visit their website.
Look for other safety measures
Do they have a stringent online password requirement? Do they have security questions? Do they have procedures that will limit access to your account if there’s an inquiry from an unexpected location or computer? Can you unlock your account online, or will it only work if you call on a specific phone line? These safety precautions might inconvenience you at times, but they’re also reassuring—they mean your online lender cares about your account’s integrity.
Look for a phone number
Can you call them on the phone? When you call their number, do you get a real person or are you trapped in recorded-customer-service hell? You can get a lot done with online FAQ pages and recorded customer service, but sometimes you need to talk to a person—especially when dealing with tricky loan issues. Be sure you have that option with your online lender.
Look for a history
Did the online lender just open? Or have they been in business for a while? Do a search online and look for forums and message boards where customers have left reviews. See what people are saying on review websites and social media. If you see any complaints, that could be a red flag—but it could also be informative and helpful, if you see the lender responding immediately and working to solve the customer’s problem.
Look for specialisation
Do they specialise in sub-prime loans? Many online lenders are more flexible in working with borrowers who have less-than-stellar credit histories, but if they only work with sub-prime borrowers, that could be a red flag. Not all sub-prime lenders are disreputable, but there tend to be more abuses in this area than with banks that serve borrowers with a more diverse range of credit histories.
Look for transparency
Is the bank active on social media? Does it publish frequently on its website? Do its materials look current and well-maintained? These are all signs that there’s someone behind the online front who’s paying attention. In addition, online lenders with social media presences are often clued-in to their customers and committed to listening to them across a range of platforms. It also gives you another way to reach them if something goes wrong.
Not all online lenders are created equally. Some have a longer history than others, better rates, and better customer service. Look for an online lender with a phone number that puts you in touch with a real person; signs of a real commitment to customer service across phone, email, instant message, and social media; strong encryption and password protection measures; and a good record among online reviews. With some research, you should be able to find an online lender that works for you.