Retail lending and online lending give you the same end result but with a slightly different product. A retail lender is usually a bank or other financial instruction, while an online lender may specialize in pay day or short-term loan products. If you’re deciding between a retail loan and loans online, you’ll need to look at the different terms and rates between the two so you don’t end up with a loan that doesn’t meet your needs.
Length
Retail loans are usually longer installment loans, so the repayment length can be anywhere from six months to more than three years. How long you have to pay the retail loan back largely depends on the amount you borrow.
Online loans are designed for the short-term, so repayment lengths are usually short, such as two weeks to one month. If you can’t pay back the loan on time, you might be able to roll over the loan to the next month, but you’ll have to pay fees and your rate may change.
Amounts
Retail lenders usually offer high loan limits. Wells Fargo, for instance, offers personal loans up to $100,000. You might have to borrow a minimum amount, such as $3,000, to qualify for a personal retail loan.
Since payday loans are meant to be short-term, loan amounts might be capped at a low figure, such as $500 or $1,000. You may be able to borrow a small amount, such as $100, as opposed to the higher minimums required on a retail loan.
Rates
Interest rates between online and retail providers vary by area and your credit. Retail lender, Wells Fargo, for example, offers loans to consumers at an average interest rate of 8.99 percent and up. Online lender rates vary but are anywhere from 15 to 30 percent.
You should get a written statement from the lender showing your interest rate before you finalize the loan. The statement will also show your repayment amounts, so make sure you can afford the loan before you sign the final papers.
Fees
Both retail loans and online lenders have fees attached to their loan products. For a retail personal loan, origination fees can go over $100. Online loan fees may also go as high as $100, depending on the lender and what amount you’re borrowing.
The fee amounts depend on how much you borrow and the lender’s fee schedule. Whether you get a retail loan or an online loan, you should receive a disclosure from the lender showing all the fees before you sign the loan papers.