We are living in an era dominated by technology. A recent study shows there has been a recent surge in the number of individuals with access to the internet. Technological advancements have transformed the world into a global village. But of interest is how businesses have been influenced by technological advancements. The things that were earlier perceived unthinkable today can be carried out. For instance, decades back, no one would think of online transactions. But what happens today? A lot of transactions are executed online. Today we want to focus our interest on one crucial thing – online lending. Specifically, we will be discussing why online loans have become so popular lately. So, let us begin.
Online banking is among the major financial trends of this century. The internet has diversified the lending business. Not so long ago, you were required to spend much of your time queuing in banks with volumes of documents to prove your creditworthiness. Today, advancements in technology have streamlined the loan application and approval process. But again, the demand for funds continues to increase as the economy grows. One study established that Singaporean financial system is one of the most outstanding in the world. The same research indicates that money lending business is a very lucrative venture, with online lending taking the lead both in terms of advancement and popularity. Why do you think online loans have become so famous? Well, here are the top reasons for the popularity of online loans:
Before one is approved for a loan, lenders must verify his or her creditworthiness. That is why documentation is necessary. Traditional banks and other lenders still emphasize on documentation. In contrast, online lenders do not require much documentation. They only focus on simple details, especially your transaction history, to approve applications. This has made them more appealing to borrowers compared to traditional banks. You don’t have to spend the entire day trying to verify your eligibility before lenders like banks.
Do Not Emphasize on Credit
One of the main strategies that lenders use to determine the eligibility of borrowers is the credit score. A credit score is computed based on your credit history. Ideally, the score ranges from 300-850 points. In most cases, lenders prefer lending to individuals with a score of above 700 points. Borrowing and repaying loans on time improves your credit score. But does this mean if your rating is less than what lenders term as good you are not eligible for a loan? Not at all! You may have bad credit because of not utilizing credit before. While traditional banks focus mainly on credit, online lenders are often willing to lend even to those who may not be having a good credit score. It is not a must you pass credit checks to be approved for online loans. You can qualify for a loan irrespective of your credit history and has attracted many borrowers.
Online loans can readily be accessed, and this is very important to borrowers. Time and unforeseen occurrences affect all of us. Online loans have proved to be of help in times of emergencies. You can apply for an online loan by visiting A1 Credit moneylender any time irrespective of where you are and get approved. Contrastingly, you need to present yourself physically to banks to apply for loans, and this may require a lot of time.
Shorter Approval Time
It takes minimal time to be approved for an online loan once the application has been filled successfully. Usually, application time takes a maximum of 10 minutes. Once the form is complete, it often takes a maximum of 5 minutes for the application to be approved. Again, after approval, the loan is usually processed, and funds can be accessed as early as the following business day. In fact, if the application is approved in the morning, you are more likely to receive funds on the same day. On the other hand, approval for loans in banks often take days or a few weeks. And once your loan is approved, you may again have to wait for some days of few weeks to access the funds. Shorter application and approval time have made online loans very popular.
While interest rates for online loans are relatively higher compared to similar loans from traditional banks, if you shop around, you can get better rates. But again, what does it take to start an online lending business in Singapore? The charges because you do not need physical premises. Additionally, the interest rates on online loans are often fixed, and this makes them so attractive from the borrowers’ standpoint. There are no worries about an increase in the loan amount due to the volatility in market rates.
Helps in Improving Credit Score
As we mentioned earlier, most lenders use credit history to determine the eligibility of borrowers. While online lenders may not focus much on credit score, it is essential to improve it. At one point, you may need other types of loans where credit score matters most. For instance, mortgage lenders put more emphasis on good credit. I believe you would love to be a homeowner in the coming days. But the good thing is that online loans can help you improve your credit score. The payments you make are often reported to credit bureaus. So, borrow and repay in time. In fact, the best way of building credit is just borrowing and paying in time.
The Bottom Line
Online lending has become very popular lately. This trend can be attributed to several factors. We have considered some in this blog. With the ever-increasing demand for money, online loans are going to be even more popular with time. But one question remains – how safe is borrowing money online? Recently, unscrupulous lenders have taken advantage of borrowers’ ignorance to make fortunes. In our next blog, we will discuss in detail how to borrow money online safely. Until then, let us know what you think about the popularity of online loans by commenting below. Thank you!