How Technology Has Made Lending Easier and Faster
Lending today is drastically different than it was a couple of decades ago. Actually, the changes that have occurred over the past ten years have been dramatic. While lending is still an industry that’s highly regulated, there are processes allowed that would not have been permitted years ago. Part of the reason why there are so many changes is because the financial crisis resulted in stricter rules and more regulations, which opened the door for online lenders.
Online lending has less regulations than traditional lending. These days, online lenders have filled in the gap left by banks to become a top choice for a lot of borrowers. The combination of technological advancements and opportunities made available by the financial crisis has made online lending a reliable source for both personal and business loans. Some business owners that are just getting started have a difficult time getting the funds they need for inventory and future growth. Many entrepreneurs turn to online lenders because their requirements are more relaxed. Another reason why they choose online lending is because the amount of time it takes to get a loan is often much shorter.
One of the biggest complaints that consumers have regarding traditional loans is the lengthy process. Online lenders have addressed this issue and developed a strong clientele by streamlining the online loan application process. A traditional loan that would take days or weeks to process will take less than a day when applying through an online lender. As a result of the competition in online lending, the application process is getting shorter. There’s also the fact that online loans are generally easier to obtain. While there are obviously requirements, online lenders tend to be more accommodating. This includes loans for the purpose of buying real estate, such as a Short Term Fix and Flip Loans chicago il.
The underwriting process for funding a bank loan has always been cumbersome and part of traditional lending that tends to take a lot of time. Underwriting requires the bank to assess whether the borrower will be able to repay the loan. It considers many aspects of the borrower’s financial status, including their credit score and employment, among other factors. While online lenders consider these factors, they typically don’t require a credit score that’s as high as traditional lenders. In fact, they are known to lend money to business owners that have bad credit. However, the interest rate is often much higher.
Given the fact that people live busy lives and are accustomed to getting things done quickly, there’s no wonder that online lending has become so popular. In fact, more traditional banks are starting to accommodate the needs of customers by offering online application processes for different types of loans, including small business and real estate loans. Consumers may choose to start with their bank when in need of funds since there’s a good chance that they’ll get a lower interest rate. If they don’t get approved, an online lender often becomes a viable option.