One of the greatest advantages consumers have found in the online age is sheer convenience. The banking and financial services sector has looked to leverage this high level of convenience, allowing you to apply for credit cards, personal loans, and several other financial products online. This has greatly increased the number of options consumers enjoy.
Bad credit loans are also more accessible than ever through online applications. In this article, we will look at several other advantages this switch to online application processes has brought.
All the Choices
As alluded to above the range of choices for consumers has increased greatly following the adoption of online application processes. Now it is easy to find several articles proclaiming the best options for that year. These can be useful will looking to narrow down your mass choices but what they often neglect to inform consumers about is the types of loan offered which have a major impact on the interest rates the consumer pay.
Broadly speaking, online loans come in four flavors a guarantor loan, where a third party becomes financially liable should you fail to meet the loan obligations. The next type of loan offered is a personal loan based on your current income and credit history, these typically have higher interest rates but not the highest. The highest interest rates are reserved for loans based on the person's ability to pay in the very short term and their credit history is barely considered or not at all.
The fourth flavour of online loan is known as peer to peer lending and is the newest form of a loan. These are typically loans initiated between two people through a platform. The two people are likely strangers but the online platform facilitates the meeting of minds so to speak. The terms of the loan are generally decided by strangers. This has proved a popular lending method in cryptocurrency.
Speed of Completion
Perhaps the biggest advantage to consumers is online loans that are fast and easy. This speed is due in part to the potential lender being able to fill out everything online, all they need is an Internet-capable device and an Internet connection. No trips to the bank to sit in queues then when you are in front of the banker. What’s more, is often online providers are not required to be as selective as brick-and-mortar banks when it comes to approving loans online loan providers have much higher approval rates. Some online loan providers have their processes so streamlined that they can approve a loan in 15 minutes. This is compared to the day brick-and-mortar banks take to approve loans.
Lower Interest Rates
Online providers have far fewer overheads than massive banks. For the consumer, this is great as it can result in lower interest rates. Further, competition in the online lending space is heating up meaning that consumers again benefit as many online loan providers will look to add value-added services to their products. Typically for larger loans over longer periods online providers often offer fixed interest rates which can bring significant peace of mind to consumers during uncertain economic times and rising interest rates.
Ability to Repair Bad Credit Ratings
For those of us who have a bad credit history, or younger people who have no credit history, online loans can help repair a bad credit history and bolster someone with no credit history. If your credit history is bad and sent your credit rating firmly into the red, it can be difficult to near impossible to take out a loan. Many online providers are willing to provide loans to those with bad credit history this in turn can be used to repair the damage that has been done. In time this can help those secure loans for life’s big decisions like buying a house, for example.
Flexible and Transparent
Online providers have proved more capable than larger banks in offering loans more flexible and thus better suited to each individual applying for a loan. This flexibility is in part due to online loan providers giving consumers the tools to determine how much can be loaned and easily paid back, as long as the term of the loan. Loan calculators are used online to improve transparency as the loan applicant knows exactly how much can be received, the interest rate, repayments, and any other costs associated with the loan before they sign off on it.
Conclusion
Online loans are not just fast and easy to apply for but provide consumers with greater levels of transparency and peace of mind. It is little wonder that consumers are turning to these more and more, forcing brick-and-mortar banks to seriously reconsider their lending strategy.