Applying for most types of loans used to be a time-consuming process. You had to go in to the lender (usually a bank or credit union), talk to a representative, fill out a loan application, and then wait for a response. If you wanted something faster or your credit wasn’t that great, your only real option was a payday or car title loan.
While many of the loan options are still the same, cloud technology has drastically sped up the process of obtaining a loan. No matter what type of loan you need, you can probably get it faster by starting out online.
Online Applications
The main difference the internet has made in the lending industry is online loan applications. Instead of having to visit the lender in person and fill out a paper application, you can submit all your information on the lender’s website and sometimes even receive a response in just seconds.
Another way cloud technology makes the loan process easier for borrowers is by providing easy access to their credit reports. The law entitles everyone to one free credit report per year from each of the three credit reporting agencies, which are Equifax, Experian, and TransUnion. You can now go online to order each of those agencies. There are also a variety of online credit estimate tools that can provide you with an estimate of your credit score. Certain banks even offer this service if you have a credit card account with them. By making it easier for borrowers to access their credit report and credit score, technology has also made it easier for borrowers to understand what their loan options are (since that depends quite a bit on the borrower’s credit score).
Online loan applications are available through most lenders. Considering how many people go on the internet first for everything they need, any lender that doesn’t offer online applications is putting themselves at a disadvantage compared to the competition.
The application process varies for each lender and type of loan. With many online applications, the lender can approve you immediately and then deposit money into your account. Other lenders only offer preapprovals through their applications, and you have to actually visit one of the lender’s locations to complete the application process. This is common with secured loans (loans that have collateral), especially those where the lender need to inspect the collateral first, such as online title loans. The lender can pre approve you based on your application, but you still have to bring your car to them so they can perform a quick inspection.
If the lender only offers preapprovals through its online application, then the application will be shorter and require less information. These pre approval applications often only require a bit of basic personal information, including your name, location, email address, and phone number.
Lenders that allow you to complete the entire loan application process have a much longer application process. You’ll have to enter your personal information and information regarding your financial history, including your current income. The lender will likely run a credit check as part of the application process.
Other Online Loan Options
New loan options are also available now thanks to technology, with one of the most prominent and useful being peer to peer lending. These sites have been around since 2005, and they allow you to post an ad requesting a certain amount of money, along with how you plan to use the money. Peer to peer lending sites include your credit score with your ad. Lenders browse through the ads and issue the loans they want as an investment, as they’ll make money when the borrower repays the loan. These sites help streamline the loan process, and if your ad is well-written, you may get a loan from a peer much faster than you would through a financial institution.
There are personal loan websites that don’t require any collateral and can deposit the funds into your bank account the same day that you’re approved. While these websites are among the fastest and most convenient options, make sure you check the interest rate. Often in the lending industry, the loans that are easiest to obtain also have the worst terms and cost you the most in the long run.
Cloud technology has made the loan process faster and more convenient for borrowers. Regardless of the type of loan you need and your financial situation, going online is the best way to start the process.
