Nowadays, consumers have several choices for borrowing money besides traditional lenders, from banks and credit unions to alternative ones. Each lender varies in structure and purpose.
But when it comes to technological innovation, online or digital lending is leading the way.
Although people have started turning their attention to online lenders, others are still hesitant to use the internet on their finances for security reasons.
However, it’s still evident that online lending is significantly changing the way people lend and borrow money.
There must be important reasons why many people are putting their trust in online loans.
If you’re interested, read on to discover how getting a loan from these online lending companies can benefit you.
Varied Financial Products
Unlike traditional lending options, online lending has many varieties available for different consumers. Because of this, you have more access to multiple types of financing that will suit your needs and resources.
The following are a few of the most common and eminent models of online lending. Each type is more or less appropriate for your financial situation.
Lines of Credit
A line of credit works almost the same way with credit cards. You’ll be given a pre-approved amount of credit that you can use for any purpose.
Then you’ll make payments along with interest only on the amount you use. When you reach your limit, you can borrow again once you repay it.
With peer-to-peer lending, you need to complete a loan application on the peer-to-peer lending platform website. The details usually include how much you need and your preferred loan term.
After that, the online platform will match you up with people willing to lend you the money.
Merchant Cash Advances
A merchant cash advance is an amount of money the lender gives to you upfront. You then repay the advance through a predetermined percentage of your business’s future earnings.
When you’re using a merchant cash advance, you’re typically selling the revenue of your future credit card sales for immediate payment.
Though it’s still a popular financing option for many businesses, a merchant cash advance most makes sense for short-term financial issues like making payroll or paying bills.
Online lending is more convenient than traditional lenders. You can save time from going to banks to get information or apply for a loan.
Since their financial products are accessible online, it’s easy for you to compare several loans all at once on the internet. Wherever you are, you can do it at your convenience.
Even if the information you’re looking for isn’t on the website, you can quickly contact their support team. With online lending, you can get the financing you need from the comfort of your home.
Online lending is designed to make borrowing as easy as possible. Thus, it’s process is more efficient and streamlined than traditional methods. You can skip the hassle of dealing with paperwork since everything is done online, and they only have limited documents required.
Unlike banks where processing can last as long as two weeks, you can almost instantly know whether you’re approved in online lending.
Online lenders usually process your loan within 24 hours from the time they received your loan application. If you get approved, you can access the fund immediately on your preferred cash-out method.
Flexible Terms and Rates
Traditional lenders are known to be picky and restrictive. They have demanding applications and high standards that make you less likely to get approved, especially if you have bad credit. But online lenders let borrowers have a lot of flexibility with their options.
Since online lending companies don’t have additional expenses for physical offices, they can utilize it to offer lower rates and fees depending on your creditworthiness. You don’t necessarily need to have perfect credit to get approved.
Online lenders have different criteria for applicants, and they don’t rely on credit scores. If you can prove to them that you have the means to pay back a loan, they can give you flexible terms.
However, they can still charge higher fees to risky borrowers that traditional lenders would often decline.
One of the online lenders’ goals is to help borrowers build a better financial future by providing cheaper and customized borrowing options.
With online lending, you have various options to design your loans and customize various elements, such as repayment schedule and monthly payment cost.
Through multiple affordability checks, online lenders can personalize their products based on your financial purpose, needs, and resources.
Whether you’re trying to get a loan for a startup business, home renovation, car purchase, or emergency expense, online lenders are always open to finance it.
There’s no perfect financing option for all types of financial needs. Whether it’s traditional or online lending, each carries certain benefits and downsides.
But like any other financial decision, it would always pay off to do a diligent search before committing to a lending company.