The lending market has changed a lot since the advent of online lending platforms. Not only do borrowers now have more options when it comes to loan products, but most importantly when it comes to choosing a lender. For those looking to qualify for a personal loan, online lenders are becoming increasingly attractive because of the promise of getting approved in less time. Who wouldn’t want to miss out on meeting a loan officer or standing in line at a bank only to be turned down?
However, before writing off a traditional bank personal loan application, let’s look in more detail at the key differences between these two options. This will help you decide which route is more appropriate based on your current circumstances and financial needs.
How is an online lender different from a bank?
Many people assume that you will only be approved for smaller loan amounts with an online lender. While it may be true at times, there are lenders today who can spend a larger amount on borrowers who qualify. In this Lightstream review This article tells you that borrowers with good credit can get approved up to $ 100,000. This amount gives you the opportunity to finance significant personal expenses, e.g. B. Pay off debts, finance a wedding, remodel your home, or even finance an investment or business opportunity.
What sets online lenders apart from traditional banks is the application process. Since the transaction is carried out online, there is no annoying preparation and filling out of paperwork. In some cases, a single online form and a look at your credit rating is all it takes to get a loan. But besides convenience, there are other notable differences in applying for a personal loan online than with a bank.
Online lenders are more willing to offer unsecured personal loans
Since the financial crisis of 2008, banks have cut back Consumer credit. Even now, banks will likely advise getting a credit card instead of applying for an unsecured personal loan. On the other hand, online lenders are increasing their consumer product offering. In addition, online lenders have made the process a lot easier for applicants.
Online lenders are more creative in their approach
The online lending approach has gotten more creative in recent years. Nowadays there are peer-to-peer lending where Private individuals finance your loan and earn interest on the process. The structure remains the same where the borrower has yet to qualify and submit requirements. But this model, along with a fresher perspective on how credit is approved, is giving the market a boost.
Online personal loans often have lower fees
Online lenders can afford to charge lower fees because the operating costs are lower too. Depending on the type of loan, you can also qualify for lower interest rates. However, on an unsecured personal loan, the interest rates can be slightly higher, as this also exposes the lender to higher risks. One advantage of this, however, is that online lenders often have fixed interest rates, which will help you manage your payments because interest rates do not fluctuate depending on the payment method current financial situation.