Are Online Lenders Better Than Banks?
Some years back, lending options were limited, unlike today. You had to visit your local bank to make a loan application. Significantly few people were lucky enough to get a loan from both banks and credit unions.
Thanks to advanced technology and the internet, the lending industry has grown. You no longer have to visit a bank office to get a loan. You can shop around for the best loan deal from a wide range of online lenders within a short period.
Understanding online lending
Online lending enables lenders and borrowers to interact and make loan deals via lending websites without traditional banks and other financial intermediaries. It may also include loans from credit unions, the government, and any additional credit similar to a bank loan that borrowers get elsewhere rather than the bank.
Online lending is associated with successful models such as peer-to-peer programs, working capital loans, lines of credit, and SBA loans. However, before closing a deal with any online lender, ensure that the lending company is legit and safe to work with.
Although banks can run a website and give online loans, they aren’t online lenders. Non-bank lenders only offer credit cards, loans, or lines of credit and don’t provide deposit accounts.
You can opt for an online loan if you need some money to cover expenses like medical bills, weddings, repairs, education, or purchase expensive items. Online lending is a great idea, especially if you don’t have time to visit the bank or need a quick loan.
Why online lenders are better than banks
1. Online loans are easier to get
Online lenders respond almost immediately on whether your loan application is successful or not, the maximum amount you can borrow, and the repayment plan. Traditional banks, on the other hand, are different. You will receive feedback days after applying for the loan.
Chances of loan approval are higher with online lenders. You can easily qualify for an online loan even with a bad credit score. Online lenders use information such as the debt-to-income ratio and utility payments to evaluate your ability to pay back the loan. Banks are, however, strict and only approve your loan application if your credit score is good.
You don’t need collateral or security to get an online loan since most online loans are unsecured. If you cannot repay the loan on time, your credit score will decrease, but your lender won’t repossess your assets. This means that you can qualify for an online loan without personal assets to register as collateral. Additionally, unlike banks, online lenders require minimal or no documentation when applying for a loan.
Work with online lenders if you’re looking for a loan with small service fees and lower interest rates. Traditional banks charge higher rates and fees since their overhead costs are also higher compared to online lenders.
2. There are many online lenders
There are numerous online lenders available in the lending market. They offer different types of loans at different rates, fees, and repayment conditions. Besides the countless options available, some online lenders allow you to customize your loan depending on your financial situation.
One of the significant advantages of online lenders is that they let you compare their loans with other lenders or other loans available. The information you gather enables you to decide on the loan type that will suit your needs perfectly.
Additionally, among the many online lenders you come across, some offer pre-approval to determine if you qualify for the specific loan you want. Your loan application process will be smooth after you are eligible for pre-approval. The prequalification procedure doesn’t affect your credit score.
However, since most online lenders are new, conduct a background check before initiating the loan application process. CashLady.com, for instance, is a reputable online lender that will help you close the best online loan deals within a short period.
3. You can get the money the same day after being approved
Online lenders act fast compared to banks and credit unions when it comes to disbursing loan funds. Once you complete an online application, your lender can choose to approve you instantly or reject your application within a few minutes. If approved, the lender can transfer the money to your bank account the same day or within one business day.
4. You don’t need to leave your home.
Online loan application is easy since the process is entirely online. You can apply from the comfort of your home using your phone, tablet, or computer. Most online lenders offer services 24 hours a day; therefore, you can contact them at any time of the day.
Once you fill the online application form, you can receive feedback almost immediately. Once approved, you will get the funds within a short period.
Most online lenders understand that their reputation determines their business success. In this case, they work towards offering the best deals for keeping their client information safe and secure. These are reasons enough to choose an online lender.
Isn’t it great to access financial aid anywhere, anytime!