LOS ANGELES, Jan. 27, 2021 /PRNewswire/ -- Online loan availability has evolved rapidly within the last decade. Most traditional banks and loan providers have moved online. Plus, online-only banks now exist — and they can offer better rates on savings accounts and bank products since they don't have as much physical infrastructure or overhead.
However, better interest rates aren't the only benefits that online lending brings borrowers. Online lending makes it faster and easier to get a loan and service the loan.
Borrowers Can Apply Directly with Their Lender or Financial Institution
Now, borrowers can apply for a loan on their bank, loan provider or credit union's website and get a decision fast. If the borrower already has an account, the borrower may be able to get a faster decision or more features.
Also, the borrower's approval chances may be slightly higher if they're a loyal customer and responsible debt user. The lender may look at the applicant's history alongside their credit score to gain more context about how good the applicant is with debt.
When applying for an online loan from a lender they've worked with before, they may be able to qualify for better rates based on their easily accessible past history. This can also be a positive change for people who are making timely payments while still building their credit.
Borrowers Can Provide Documentation Faster
Bringing in paperwork and visiting a financial institution in person both take valuable time. In this increasingly busy world, people will save time wherever they can.
Digital financial services like online lending allows borrowers to provide their information much faster, saving time. Instead of visiting in person and waiting in line, the borrower can simply enter their information online and click through a few screens.
Online lenders often let borrowers log in with their banking information to provide some of the necessary information quickly.
Lenders Can Approve and Fund Borrower's Loans Faster
Automation can help lenders make faster approval decisions. Software programs can check borrower applications against various criteria and automatically screen in applicants that meet or exceed that criteria.
Digital lending also allows borrowers to link accounts to the lender's website. In doing so, funding can happen faster. The lender can disburse the borrower's funds directly to their bank account. Many loans can even be funded the day they're approved, such as a same day, online cash advance.
Borrowers Can Repay Loans More Easily
Thanks to online lending, borrowers no longer need to mail in or drop off their loan payments. They can hop online and pay out of their linked bank account in a few clicks.
Autopay features make this even easier. Borrowers can ensure they never miss a payment — thus avoiding late fees and penalties — by setting up autopay.
Additionally, some loans offer borrowers a small discount or slightly reduced interest rate on their loans if they set up autopay. Federal student loans are a prime example.
With that said, borrowers need to continue to balance their virtual checkbook to avoid overdraws (going below a $0 balance in their account). They can request overdraw protection features from their bank (such as automatic transfer from a savings account) to prevent accidental overdraws when autopay is set up.
Notice: Information provided in this article is for informational purposes only. Consult a financial advisor about your financial circumstances.
About Advance America
Founded in 1997, Advance America, the country's leading state-licensed consumer lender, seeks to help every customer achieve their version of financial stability through a variety of innovative, regulated and transparent small-dollar credit options.
SOURCE Advance America