Technological advancements have diversified human life in a significant way. I don’t know how life would have been without the internet today. Individuals turn to the internet whenever they want something important. A recent study shows access to the internet has increased and the trend will continue in the coming years. Nearly everything in life has been affected by technology. Today, we want to focus our attention to one area where technology has really been essential – lending money. There are so many online loans today. Lenders appreciate the fact that borrowers try to compare loans online before applying. To counter this, the money lending institutions try their best to augment their online presence. It has become very easy to apply for loans only today. Gone are the days when people used to spend a lot of time in queues for verification of their application documents. Today, there is less to no documentation when it comes to the loan application. This exactly an improvement compared to the traditional money lending system where heavy documentation was perceived to be an added advantage. But how specifically are lenders adopting technology? This discussion will provide all the details you need to know in this regard. Our question of interest is – Just How Online Loan Providers Make Use of Technological Innovation to Accept Loans. Let us see.
How Lenders Use Technology
There are various ways in which money lenders use technology today. Lenders have benefitted more from financial technology than other players. As we mentioned earlier, technology has indeed opened up a lot of opportunities not only to lenders but also to borrowers. The following four points demonstrate how loan providers make use of technology to accept loans:
- Loan applications. I don’t think there are people out there who are still comfortable with the idea of carrying many documents for loan application. At least not you. It is time to live green friend! Today, lenders make it so easy for borrowers to complete loan applications and lessen carbon footprint by providing a paperless application platform. What is more, digital applications have made it possible for the information to be examined using innovative software programs. This lessens the amount of time required to securitize the information provided by the applicants. It has become so easy for lenders to determine applicants’ creditworthiness. This is exactly the opposite of what happens in traditional lending system.
- Linking bank accounts. Online loan providers have taken full advantage of technological innovations to make it possible for borrowers to link their bank accounts safely. Apart from simplifying the application process, the whole arrangement has been made safer for borrowers. Besides, the online environment is healthier compared to conventional lending. Assuming you are a business person, traditionally the lender would be required to examine your business’s bank details. The bank would be required to give physical records for ranging from 3 to 6 months. It is so difficult to tell exactly when the business will fall short of funds and so these records would be maintained indefinitely to be made available whenever needed.
- Availing a variety of loans. One thing that has actually facilitated online lending businesses is the provision of a variety of loans. Borrowers can access nearly all types of personal loans online. The following is a brief overview of some online loans available today:
- Term loans. This loan arrangement is nearly the same as the traditional bank loan. Usually, you apply for a loan and agree with the lender about the repayment period. You will be required to pay monthly installments until the principal amount plus interest if fully repaid. Even though these loans are relatively expensive than bank term loans, borrowers can easily get approved for them. Besides, it may only take a few days for applicants to access funds.
- Equipment loans. This is actually the best alternative for businesses that cannot afford to finance the purchase of important equipment. Lenders offer the cash and use the equipment purchased as collateral for the loan. Upon payment of the loan amount in full, you will assume ownership of the equipment.
- Invoice financing. In this arrangement, a loan is given against the outstanding invoices. In this case, the invoices serve as collateral to the loan amount.
- Credit cards. Though not perceived as a loan technically, this one of the most common finance option not only for personal use but also for businesses. There are so many online credit card companies that offer a lot of bonuses. Besides, it is so easy to qualify for them. The only problem is that usually have high-interest rates, meaning they are expensive.
There are many other options available. By giving borrowers a wide range of options to choose from, online money providers have diversified the lives of individuals, either directly or through their businesses.
- Improving accessibility. Online money providers have used technology to enhance their operations. Lenders can easily be accessed online. This is one of the most attractive features of online lending. You can apply and get approved for a loan anywhere and anytime. This has increased accessibility to funds in a significant way. The fact that you can borrow and get approved even while at home has become very attractive. You don’t have to spend time in banks for applications. If you are plagued with an emergency, all you need is an internet connection and you can be approved for a loan within hours.
The Bottom Line
Technology has significantly impacted money lending businesses. As illustrated in this blog, there are different ways in which online loan providers make use of technological innovation to accept loans. Nonetheless, it also important to remember that lenders are in business and profit from you. So be careful with the types of loans you apply. Some like payday loans have very high-interest rates and can detriment your financial status. It’s important if you check loan advisor before applying for a loan to get better rates.