One way or another, you will likely take out a credit product at some point in your life. Generally, these loans will come as car loans or as a mortgage. Moreover, you will probably get your credit from a traditional lending institution, like a bank or credit union.
As time progresses, however, more and more people are applying for alternative lending options. These online short term loans are changing the traditional, albeit stale, lending model and reflect a more general change in society.
We’ll outline a few key ways online short term lenders are shifting the way people get credit.
- Speed
The effects of our transition into an on-demand society are well-documented and widespread. A prime example is the humble video store.
Years ago, the video store dominated the realm of home entertainment. Moreover, if there was a movie in particular you wanted to watch, you would need to find a store that had a copy in stock. Depending on where you lived, it could be several hours between deciding on the film you want and inserting the disc into the DVD player. This model is almost inconceivable when compared to today’s range of on-demand streaming services.
Now, consider the traditional way of applying for a loan from a bank. Between the endless meetings and wait-times, it could be several days before you receive an outcome on your application. Luckily, accessing credit online has also been dragged into the 21st century.
These days, consumers can apply online for a short term loan in minutes. Depending on the lender, they may even receive cash in their account within the hour.
- Convenience
Convenience is key for online credit providers. In short, these lenders design their application process to be as smooth and as streamlined as possible.
In the past, consumers would sometimes need to present recent copies of their bank statements to the lender. These statements would then be considered during the assessment process. What did this all mean for the consumers? Paperwork – mountains and mountains of paperwork.
While we all wish we were super organised, this is simply not a possibility for most people. This would then translate into rummaging around in old filing cabinets and dustbins for hours on end trying to find the relevant paperwork.
Fortunately, things have changed significantly over the years. With the power of the internet and modern software, you may be able to apply for a short term loan without handing over a single piece of physical paperwork.
Furthermore, most online lenders are just that – 100% online. This means that you could potentially apply for a loan without ever leaving your house; imagine applying for thousands of dollars in your pyjamas a few years ago.
Therefore, if the electric company is threatening to cut your heating and light because of a missed bill, a short term loan can quickly be processed into your account. From there, you can settle your debt with your utility provider and then spread your repayments manageable over the coming weeks or months.
Finally, as their name suggests, short term loans can be repaid quickly. While this may translate into higher regular repayments, consumers can be debt-free sooner if they meet the terms of their loan. This is a far cry from a lifelong mortgage, which stems from the French phrase ‘dead pledge’.
- Open criteria
Depending on your circumstances, it can be difficult to access certain types of credit. For example, a few financial hiccups in the past may leave you with a bad credit record. Bad credit history, as we all know, can quickly shrink your chances of approval.
Within this new online lending model, however, more and more credit providers are willing to consider bad credit applicants. In other words, a default or failed loan from years ago may not automatically disbar you from short term lenders.
This is great news for people who have been traditionally barred from the credit market. After all, bad credit can be difficult enough to get out of.
In addition, any consumer with a device and an internet connection can now apply. Compare this to the old model of applying physically in a branch. This is, of course, not an issue if you live inner-city near a branch. If, however, you live in a rural community, this can quickly become an issue.
To conclude
As you can see, the world is changing rapidly; lending is no different. You can now browse, compare, apply for, and access short term loans from virtually anywhere. For better or for worse, on-demand lending is here and it looks like it’s here to stay. Why not make it work for you?
