Long gone are the days when you needed to go to the bank and fill out a long application form to get a loan. More often than not, traditional lending options require you to wait for days, if not weeks, before you can get the funds, and that largely depends on the type of loan you choose. Today, a lot of financial institutions have brought their operations online, speeding up the application review time while providing high-quality services hassle-free. Let's look at the main benefits of online lending and why you should choose it over traditional banking methods.
What Is Online Lending?
Online lending websites offer a wide range of services, from opening a loan application to advising the best financial solutions to the clients. All financial operations take place online, and people can apply for business loans, personal loans, start-up funding, house loans, auto loans, and many others. Depending on the type of loan you choose, your application can be reviewed within 24 hours, and you'll get the funds right after that. Some of the popular digital lending services include Lendup, SoFi, LightStream, Avant, Upgrade, Discover, and others.
The Main Benefits of Digital Loans
Apart from providing high-quality lending services much faster compared to their traditional counterparts, online lending companies have a few other benefits. Let’s review some of them.
1. These Services Are Flexible
Credit history is a major concern of any business owner or individual who wants to apply for a loan. Digital lending companies have fewer restrictions when it comes to applicants and can provide loans to people with less-than-perfect credit history. Still, online lending companies check the applicants' backgrounds to reduce financial risks. As a rule, AI-powered algorithms are used to analyze the financial history of a given customer.
2. Faster Access to Money
Getting funds via loans is a long process if you do it the usual way. You'll need to physically attend the financial institution, fill out a form, and then wait for the application to be reviewed. It can take up to a week to receive the money, depending on the nature of your loan. Online lending companies use automation tools and AI software to speed up the decision-making process and reduce waiting time. According to statistics, digital lending companies process 30% more inquiries compared to other banking institutions. They also experience a 15% revenue growth, and their profitability is much higher compared to the competitors.
3. A Customer-Centric Approach
Online lending businesses heavily rely on automation tools, AI software, and chatbots to improve the quality of their services. This approach allows them to provide 24/7 customer support, unlike traditional institutions that have fixed working hours and weekends. Customers can also receive help with their queries and questions at any time of the day while getting real-time updates on the status of their application. Some companies use AI advisors that provide an even more tailored service to the customers, educating them about the options they have in their current financial situation.
4. Better Interest Rates
Without the need to support physical branches, rent spaces, and hire additional staff, online lending companies can considerably cut their spending. This, in turn, allows them to offer customers lower interest rates. These companies automate a huge bulk of their tasks using cutting-edge AI software, and that further lowers operational costs. Some companies also offer a growing maximum loan amount, according to the paying habits of a given customer. If you're paying out on time, your maximum loan amount may increase.
5. Crypto-Backed Loans
Cryptocurrency lending may not be a widespread practice, nevertheless, it offers flexibility and can become a great option for crypto-owners. To use this service, you will need to head to a specialized crypto-lending website that is geared to help you with this type of transaction. Crypto-backed lending works similarly to the traditional type, but instead of usual currency, cryptocurrency is used. These platforms allow customers to become either borrowers or lenders, letting their crypto assets work for them in a different way.
Crypto lending platforms can be either centralized, which are closer to traditional banks in the way they operate, or decentralized. The latter operate on blockchain technology, allowing for peer-to-peer transactions, and use smart contracts to facilitate the financial operations.
Conclusion
In the day and age when most financial operations have gone online, digital lending offers a wide range of benefits that can make it a great choice for many customers. With their flexible lending systems and automation software, digital lending companies provide a much more affordable service to clients. At the same time, the applications get reviewed faster and clients can get funds in just one business day, depending on the type of loan they need. Cryptocurrency loans are yet another option for customers who want to step away from traditional banking systems.
