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5 Tips for Applying to an Online Loan

Updated: Apr 6

Online loans are a convenient and quick way of obtaining money to help with your financial situation in times of need.

Today, I'll share with you 5 major tips for when you are applying to an online loan that will help you make a more confident decision.


You may have done some research weighing different lending options and narrowed it down to a personal loan.

Or you're still unsure about what type of online loan you can get.

Don't worry!

Simply put, an online personal loan provides you with a lump sum of money which you will need to pay back in regular installments.

However, an online payday loan is an alternative that is better suited for individuals with more difficulty to qualify for a regular loan because of poor credit.

Researching for different online loan options can sometimes be overwhelming, especially when you need cash quickly.

But let me simplify it for you using these 5 simple tips to help with your decision.

#1 - Know your Credit Score

Knowing your credit score will save you a lot of time during your research when comparing different lender options.


Because many lenders have a set range of credit scores that they use in their approval process, and if your score does not fall in that range, you're more likely to be rejected.


According to Equifax Canada,

Lenders generally see those with credit scores of 600 or above as lower risk.

If you're not sure what your credit score is and want a quick and easy way to find out approximately, I use creditKarma and highly recommend it!

But if you prefer a more direct approach, you can learn more about how to check your credit score on Equifax.

Now, what credit score is considered good?

Generally speaking, the ranking goes as follow:


Credit Score Range


760 - 900

Very good

725 - 759


660 - 724


600 - 659


300 - 599

But if you're good with credit and have managed your payments well, you'd probably score higher than 672 which is approximately the average credit score in Canada.

#2 - Find and Compare Loan APRs

The loan APR stands for the annual percentage rate which is composed of the total sum of the interest rate and all fees.

It essentially represents the total cost of your loan.

fees chart

Many loans come with extra fees besides the usual interest rate they carry.

These may include administration, prepayment or application fees.

As a general threshold of affordability, 36% APR is the acceptable limit for a loan to be considered affordable, beyond which it becomes quite difficult to manage your payments.

However, most individuals with good credit scores can receive much lower rates in the ranges of 10-20%.

I find this APR calculator to be quite helpful!

#3 - Do a Pre-qualification

Would you prefer to get an estimate on the loan you may qualify for before commiting to it?

Many online loan lenders also have a pre-qualification tool on their platforms.

Pre-qualification is a convenient way of getting an estimate for the loan you can qualify for without making any commitments, and it will not affect your credit score.

pre-approved image

So if you're going to pre-qualify, have some of your information ready to use such as:

  • Overall income

  • Overall debt

  • Credit Score

#4 - Check the Lender's Previous Customer Experience

We can all agree that customer experience matters.

Understanding how your lender has dealt with customers in the past can be a very insightful metric.


Because it will help you prevent future headaches if there needs to be any adjustments or situations evolve.

customer satisfaction rating

Both subjective and objective reviews from friends, family or previous customers can help to surface problems that you may not notice before you start borrowing money from the lender.

Is the lender available via phone, email or chat?

Are you able to set up an appointment at a physical location to get assistance?

What is the lender's hours of operation?

These are some questions to think about when you're comparing different lenders.

#5 - Extra Services and Discounts

Do you want a discount applied to your pre-qualified loan?

What about free credit reports or privacy protection services?

Many lenders offer reduced rates, especially to those with good credit and payment history.

Use it to your advantage!

How can I get a discount?

1. If you're an existing client of a bank and have a good history with them, the bank may provide you with discounted rates.

2. You can negotiate for a lower rate at your bank by using a rate you were quoted by an online lender.

That's one of the reasons why I mentioned to do a pre-qualification.

3. Some lenders offer a discount if you choose to let them send the funds directly to your creditors to consolidate your debt.

4. If you're able to setup automatic payments, some lenders may reduce your rate by a small amount in the range of 0.25% - 0.5%.

Consider this example where you are quoted for a $10,000 online personal loan, with a 6% annual interest rate.

Now that's a great deal to begin with.

But if you were to get a discount on your rate and reduce it down to 5% instead, you would save $100 in interest payments over the course of your repayment period.

Not bad.

You may also be able to receive free credit scores and reports from your lender when you apply for the online loan.

So make sure to get the most from your lender when you're applying for an online loan!

To Sum Up

Overall, online loans can be a convenient way of getting a decently large sum money in a short span of time.

Sometimes they can get approved without even a credit check, though not commonly.

Make sure to have your credit score ready, properly compare rates and fees across different lenders and review their customer experience reviews.

And lastly, don't rush the decision. There also many online lenders posed as scams, so make sure they are legitimate.

Like this post and let me know in the comments if this was helpful to you!

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