Fintech is one of the biggest industries in the world today and has changed the way we use money. Traditional banks are not quite keeping up with Fintech companies. They tend to be late adopters of ubiquitous financial technology, and certain services are still painfully archaic. This is the general experience of people who go to their banks for loans. Instead of a simple and immediate process, they find a pile of paperwork followed by at least a few days of waiting.
Nonetheless, most consumers are wary of loans that come from just about anywhere else. It’s understandable, considering that there are so many predatory companies out there with little to no regulation. But there are some really good options for getting a loan online that are not just convenient but responsible and safe.
Top 3 Online Loan Recommendations
Before you start searching for online loans, it is important that you know what to look for. One loan is not as good as another, and some options could land you in serious debt.
These are my top 3 online loan recommendations:
1. Lending Club (Peer-to-Peer)
Lending Club has been around since 2007, although many people still have not heard of the concept. Lending Club loans utilize a peer-to-peer framework. In other words, you are not borrowing from a bank, but are rather borrowing from one or more individual lenders.
So, how does this help you? Well, lenders are not bound by the age-old systems used by banks. They offer you lower interest rates, as they can afford to do so while still making money. Your loan is basically an investment for them with a fixed return. In certain cases, it is beneficial for the lender to offer long repayment terms – you can get a five-year loan fairly easily.
You can also get Lending Club loans without having a particularly strong credit score. Lending Club looks at the chances of you paying back the loan according to your current financial status, rather than solely on what has happened in the past.
Lending Club is a good option for online loans. It’s convenient, less costly, and many people like the idea that their interest is not going to a massive bank. One con is that it does take a week for the money to come into your account, so you shouldn’t expect immediate funds.
Many young people face a problem when trying to get loans approved for the first time. They have no credit score. Most banks and corporations require you to have a credit score to borrow money, but you can’t get a credit score unless you have already borrowed money and proven you could pay it back.
This is where Upstart comes in. Upstart provides loans without relying on rigid markers like credit records. Rather, they look at your earning potential. If you’re just out of college, as many Upstart loanees are, your education and employment will play a big part in Upstart approving your loan. These factors, among others, are much better indicators that you’ll be able to pay back the loan.
Upstart is a little bit more expensive than other types of online loans, but it is still cheaper than going with the traditional lenders and it provides those with no credit score an opportunity to kickstart their financial independence.
3. SoFi Membership
Social Finance, better known as SoFi, is an online finance company that offers some of the best benefits when it comes to online loans. Unlike Upstart and Lending Club, you do need a strong credit score to be eligible for a SoFi loan. However, getting a SoFi loan and becoming a member is well worth it.
This is because SoFi offers loans of up to $100,000, with relatively low interest rates. Since it’s also online, everything about it is convenient, including tracking your progress in repayments and applying for any additional SoFi loan.
Unemployment protection is one of the best features of SoFi loans. If you lose your job, they will defer your loan for a year, while you get back on your feet and get a new job. This provides peace of mind to many loanees.
SoFi loans also have no fees, and you become part of an exclusive club, with invites to special events.
If you need a loan, you should reconsider choosing one of the age-old, traditional options. Modern online loan companies offer better benefits and lower interest rates, while being more accessible. While payday loans and other types of predatory loan companies exist, the above 3 options are safe and well worth their hype.
loan concept -DepositPhotos