No matter what your financial situation is, there might be a time when you need an online loan. Click here to learn five ways lenders are changing the process.
What’s the one thing most Americans have in common, besides a love for spray cheese?
There are a couple of answers that could fit the bill, but what we’re looking for is household debt! Perhaps you didn’t know that about 80 percent of American households are in some form of financial debt.
What’s more, the rapid advancement of financial technology has seen traditional banks and credit unions lose a chunk of customers to online or internet-only lenders.
Keen to learn more about online lending?
In this article, we’re telling you how online loan lenders are revolutionizing the financial landscape.
- Fast Access to Credit
Traditional banks have a bad reputation for playing hardball with loan applicants. Borrowers have to fill out more than a couple of forms and wait for days, weeks even, to get an approval. Never mind a simpler clerical error can get your request turned down.
Online lenders are changing that.
Today, you can access credit in minutes. All you have to do is log in to your preferred online lender’s web portal or mobile application, enter your personal details, and bingo!
Sure, if you’re a first-time borrower the approval a process could take a little longer than a few hours, but once you’ve developed a relationship with the lender, credit is accessible in minutes.
In addition to rapid approvals, you can access credit facilities from anywhere in the country or abroad. Gone are the times when you had to visit your local branch to apply from credit. With online lenders, your only limitation is lack of an internet connection.
- Credit Process Automation
One of the reasons traditional lenders take ages to approve and disburse credit is that they have to manually verify borrowers’ details.
On the other hand, online lenders rely on credit process automation to make speedy loans to borrowers. By integrating various fintech solutions into their digital lending platforms, these lenders are able to automatically verify borrower information, assess risk, make approval decisions and disburse the loans.
Automation eliminates the need for human labor, especially loan underwriters. The net effect is internet lenders have lower operating costs and are able to offer cheaper loans.
- Introduction of New Lending Models
You don’t just walk into any bank or credit union and apply for a loan.
The only way to increase your chances of approval for a credit facility by a traditional lender is to build a relationship with the lender. Open an account and make regular deposits. This relationship-building takes months before a lender decides to take it to the next level — the credit level.
Thanks to online loan lenders, the financial industry is moving away from this lending strategy. They’re now embracing newer and more inclusive models.
Peer to peer lending is one such model that doesn’t ride on customer deposits. Lenders operating this model develop online platforms that connect borrowers with individual lenders.
To get a loan, a borrower provides a compelling reason why they need the money, after which an interested peer lender reaches out and closes the deal. For brokering the transaction, the online lender takes a small fee.
Other online lenders, especially mobile lending startups, raise billions of money from investors and then lend it out to consumers.
- Bad Credit? No Problem
The only other thing that is certain besides death and taxes is a traditional lender turning down a borrower with poor credit.
In a country where 68 million people have bad or poor credit, a financial emergency can leave many Americans in dire straights
The positive news is online lenders have brought that to a halt. Many of these lenders offer no credit check loans, giving millions of Americans with bad, poor or no credit a chance to secure credit. Millions of people are able to take strides toward financial freedom.
But, why don’t these lenders do credit checks? Aren’t they exposing themselves to excessive risk?
According to LearnBonds, you can gain access credit today within minutes. All you have to do is log in to your preferred online lender’s web portal or mobile application, enter your personal details, and bingo!
Well, a credit score might be a reflection of your financial history, but it might not be an accurate reflection of your current status.
Perhaps you lost your source of income last year, skipped your monthly bills and defaulted on your loans, all which combined to bury your score. But now you’ve got a job or your business is thriving. Should you be locked out of getting credit because of past financial mistakes?
In a way, online lenders have embraced this line of thought. That’s why they care more about your current ability to repay your loans than your credit score.
- Millennials Are Having Their Way
Being a millennial is a full-time job – with no paid overtime. From having people label them needy and entitled to being the objects of hate for older generations, it’s tough being a millennial.
Not everybody is sidelining and hating on millennials, though. At least not in the banking and finance industry where organizations are putting their needs first.
You see, millennials love tech and the internet. They spend a hell lot of time on social media and buy everything online (including dinner and real estate). They now want their money online, and the players are listening.
By digitizing the lending process, online lenders have played into the arms of millennials, who, in 2019, will outnumber boomers and become the largest living generation. Traditional lenders will either start doing things the millennial-way or watch as online lenders take center stage.
Online Loan Lenders – The Future Is Here
A decade or two ago, who would have thought a time would come when the lending process would be fully online? That you don’t have to leave your couch to get a loan?
Fintech has changed that. It has made the impossible a matter of time. Online loan lenders are now very much in business, and they’re defining the financial landscape.
Welcome to the future, and stay tuned to our blog for more banking and finance content.