In 2018, the value of digital personal financing transactions in the US amounted to $440.9 million. That’s almost half of the total value of all digital payment transactions made that year!
In fact, in 2019, fintech lenders had originated more than a third of all unsecured personal loans in the US.
The big question is, what exactly are fintech lenders? How do they make it possible to borrow money online and are online lenders safe and secure at all?
We’ve rounded up all the answers to these questions you have below, so be sure to keep your eyes glued to this page!
What Are Fintech Companies?
Online loans or online lending is one form of fintech. The word “fintech” is a portmanteau of the term “financial technology”. Its goal is to automate and digitize the use and delivery of financial products and services.
It’s an evolving technology, but its roots date back to 1866. This year, after all, marked the successful laying of the first-ever transatlantic cable.
Fast forward to the 21st century, and fintech has expanded to online lending. It’s also thanks to fintech that we can enjoy the convenience of digitized fun transfers. The same goes for tech-enabled payments, crowdfunding, and every aspect of modern financing.
That said, many fintech companies are online private lenders for personal loans. Others work with a network of lenders, connecting borrowers to their lending partners. Many also offer online business loans and even car financing programs.
Why Should You Borrow Money Online From These Lenders?
Online loans are becoming more popular because they have more relaxed requirements. That’s in comparison with traditional banks, which continue to tighten their lending standards. In fact, in early 2020, 18.4% of surveyed banks said they will tighten their credit card issuing standards.
On the other hand, online lenders are willing to extend their loans to almost any borrower. In fact, these lenders market many of their products toward subprime borrowers.
This means you can apply for a loan despite your poor credit, and you will still have a chance to qualify. Keep in mind that up to 76% of personal loans get rejected by traditional lenders. Bad credit is the top reason for such rejections.
If you need access to funds now, and you think your credit score won’t cut it, money loans online may be a good option. In many cases, you’ll get a loan offer within 24 hours. If the loan terms are a good fit for your needs, simply agree to the contract and you’ll get the money wired to you.
A Few Safety Reminders
Before you send in any online loan application, be sure to check the site’s security first. A secure website should have a lock icon right before their site URL (or web address). The web address itself should begin with an “https://”, the “s” for which stands for “secure”.
Beware sites that have a “!” icon followed by a “Not Secure” warning on their web addresses. These sites use outdated internet protocols, hence the “Not Secure” warning.
Getting Started: The Minimum Requirements
The first step to applying for an online loan is to check each lender’s requirements. This applies to whether you have a good, bad, or poor credit score. Even if their loans are easier to qualify for, all online lenders still have a list of requirements.
For starters, most lenders have a minimum monthly income requirement. Some may require you to have an income of at least $2,000 a month, while others only need $1,000. All lenders require a stable source of income though, as well as a valid bank account (savings or checking).
If you meet all these and you’re at least 18 years old, then you pass the pre-qualifications! You can now begin with the second step, which is to fill out the online application form.
The Online Borrowing Process
You only need to answer as few as four questions when filling out the application form. These include how much you want to borrow, your monthly income, your name, and your email address.
If you’re using a direct lender, the lender will contact you soon after they review your details. If you use a referral service, you’ll get connected to multiple lenders. You’ll have more loan offers to choose from, which you should then compare to find the one that best fits your needs.
Once you’ve chosen a lender’s offer, all you need to do is to wait for their decision. Again, online lending institutions specialize in the fast delivery of loan products. As such, you’re most likely to know their decision within the day or the next business day.
The Contract Signing
If you get approved, be sure to read the fine print to learn exactly what your loan terms are. Pay close attention to the interest rate and the payment due dates. This way, you can create a repayment schedule that will lower your risks of missing payments.
After reviewing the loan terms and conditions, you can now feel free to agree! If you do agree, just follow the simple instructions in the contract and send it back to the lender.
The Delivery of Funds
All that’s left for you to do now is to wait for at least 24 hours to get your money. The lender will carry out an electronic transfer of the funds to your provided bank account. As soon as you receive it, you can now withdraw it, pay for your bills, or do some grocery shopping.
Get That Cash You Need Now
There you have it, your ultimate guide on why and how to borrow money online. This should also answer your question “do online loans really work?”. Yes, they do—it’s only a matter of ensuring you’re working with a legit company.
So long as you keep our safety and contract signing tips in mind, you’ll be able to work with legitimate lenders.
Ready to get that cash wired to your bank account as soon as possible? Then please feel free to request your loan now using our online application form!