In recent years, online loans have increasingly become popular, with more borrowers opting for more convenient alternatives to the services offered by traditional banking institutions. In 2015, the online lending industry was close to hitting the $50 billion mark, and by 2020, one out of five SMEs is estimated to become dependent on alternative lenders. But what has spurred the exponential growth of the online alternative-lending industry?
One advantage of alternative loans is that they are extremely convenient. The services are available 24-7, and you don’t have to go to the bank to apply for one. Applications are easy and straightforward and can be done right from your smartphone. For online personal loans, no documentation is required, while for online business loans and payday loans, you may need a few documents for verification purposes. But the best thing is that the borrowed money is deposited instantly into your bank account upon approval.
Personally Tailored Loan Products
You may also agree with me that online loans have been diversified to cater to the ever-changing demands and needs of the public. Today, you can have access to payday loans, online instalment/term loans, business loans, peer to peer loans, and debt consolidation loans, among many others.
When online loans first hit the scene, lenders were unregulated and used to play by their own rules. The high-interest rates and hidden fees greatly discouraged customers, so both borrowers and investors were not very keen on jumping on the bandwagon. But with government regulation, the online loans industry is now a clean field, promoting and consolidating trust between lenders and borrowers.
Top-Class Technological Advances
Beside the online loans, the industry is based on a wealth of technological advances. With the growth of mobile and internet technology, lenders and borrowers now have a conducive work environment. Artificial Intelligence (AI) is now widely used in determining the creditworthiness of borrowers, managing applications, and keeping track of loan processes, while constantly learning and bettering itself.
In recent times, we have also witnessed the emergence of a phenomenon called online loan marketplaces where borrowers meet lenders and have the best personal loan offers literally at their fingertips. Today, if you are a lender, you don’t necessarily need launch an online loan startup to find customers. Popular loan comparison platforms like the Sweden-based HittaSMSLan bring together dozens if not hundreds of online lenders under one roof.
These are the top reasons that have shaped up the online alternative-loan industry into the booming business we see today. The high appetite for borrowing has also contributed to the growth. Banks have also climbed on the bandwagon of FinTech solutions and techs to make their products and services more palatable especially to the tech-savvy but hard to please Millennial generation.
Whether you are looking for an emergency online personal loan or a business loan, applying for it is now as simple as ABC. But then, due diligence is essential on both the lender’s and the borrower’s side. As a lender, make sure to explicitly adhere to all the laid down lending regulations in your area, including online loan fraud protection.
As a borrower, it is imperative to select a trustworthy lender in a market packed with both genuine lenders and unscrupulous dealers. Carefully assess the interest rates, charges, and most importantly, the loan repayment schedule. But above all, exercise responsible borrowing and always have a clear plan on how you are going to repay the loan.