Going the online route for lending can save you money by giving you a wider variety of loan options and tools that haven't been available in previous decades. That’s just two of the many benefits you get when you consider an online loan instead of walking into the local brick-and-mortar financial institution.
The Benefits of Online Lenders
According to a study conducted by Experian in 2019, online lenders are responsible for 49.4% of unsecured personal loans in the United States. That’s a 22.4% market share increase since 2015. In other words, more people are borrowing online.
In the case of online lending, there are a few reasons these loans are so popular. The growth can be attributed to:
- More flexible application criteria: Borrowers with lower credit scores and more challenging financial situations are more likely to be approved by online lenders than local financial institutions. It’s typically easier to get pre-approved and funds come in faster.
- Easier to compare different lenders: Different companies in the lending space can do the comparison for you, saving time and travel expenses because borrowers can do everything from their keyboard. That makes it easy to shop for lower-cost loans.
- Better interest rates: Focusing only on brick-and-mortar lenders limits your choices for interest rates. Many online lenders have competitive interest rates because they don’t have to account for the overhead costs of storefronts.
- More no-fee options: Due to the number of choices you have, it’s easier to find a lender online that does not charge origination, application or processing fees. Lenders are legally required to disclose these, so be sure to read the fine print.
- Bank from home: Not having to leave your couch to manage your loan has a variety of benefits. You can enjoy the privacy of managing financial services at home, the safety of social distancing, and the convenience of paying off your loan in your PJs.
Taken individually, each of these factors can be a great way to save some money on a loan. Combined together, you’re looking at significant savings.
The numbers for 2020 aren’t available yet, but it’s a good bet that market share increased again. In addition to the reasons listed above, online loans are an easy way to practice social distancing and receive contactless cash.
Notice: Information provided in this article is for informational purposes only. Consult your attorney or financial advisor about your financial circumstances.
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Original Source: How Online Loans Can Help You Save Money Compared to Brick-and-Mortar Financial Institutions