Online finance
There are many ways of getting finance or loan, as is said in general. A borrower can approach financial institution or representatives of lenders, who are found very keen to make visits, can approach him for discussing the terms and conditions. There is one more way in which finance can be obtained and it is by means of internet.
Internet has revolutionized many industries and finance is one of them. Online finance has become very popular these days and why it should not? If financial requirements for buying home, car or business expansion etc are fulfilled while enjoying a cup of coffee, why a person would go out and make efforts. Online finance has many characteristics. These work well for borrower as well as lender. A critical analysis of these is must so that no problems are faced afterwards.
Characteristics of Online Finance
First characteristic of online finance is easy and hassle free application. In fact, this is one characteristic that has played an important role in making online finance popular. Unlike past, a person is not required to visit office or branch of lender and make a request for the application form. Online applications are welcomed by almost all the lenders these days. These applications have been loaded on the web site of lending institutions. A person can also find these through search engine. Online finance applications are mostly provided in easy to understand language and no technical or specific study is required for understanding and filling different fields.
For example, in case of term loans, borrower is not required to provide debt service coverage ratio in the application. These are calculated by the finance professionals attached with lenders that review the application of borrower. Some of common fields in online application are name and other personal details, employment history, etc. Other personal details include present and previous addresses, age, etc. As internet crime is increasing day by day, lenders have done away with the requirement of social security number. Other fields in online application are amount of loan, repayment period, interest rate, security details etc. Filling and submission of online finance application takes few minutes only.
Next important character of online finance is fast approval. As soon as application is submitted, it is reviewed by the professionals attached with lending institutions. Approval on the basis of information provided in the application form is granted on no time. However, if due to any reason, it is found that borrower has not provided correct information or has concealed some material facts, application may be rejected. Approval for loan is different from grant of loan. Thus, there should be no foul play in applying for online finance.
Third important characteristic of online finance is low interest rate. This is contrary to common belief that if any organization or service provider is allowing for comfort, it would definitely charge extra. In case of online finance, interest rates are found lower than the interest rates of traditional institutions. This is because online finance centers work at more profit margins than their counterparts. Overhead costs are reduced drastically. Office maintenance costs are very low. These benefits are passed on to the borrower by the lender in the form of low rates. Similarly, closing costs and upfront fees that are charged by online lenders are lower. Low interest rate along with lower closing costs and upfront fee reduces the overall cost of loan considerably. Low costs on online finance have attracted people in large numbers. Enhanced savings can be utilized for purchase of assets etc.
Some people believe that online finance sources can offer loans even to those people whose application forms have been rejected by other lenders. This is true. Online finance centers have been found very helpful in making bad or poor credit advances. In fact some online centers have specialized themselves as bad credit lenders. Millions of people are suffering from poor credit in United States and other countries. For these people, online finance sources act as mainstream lenders. This is because they know if application is made to any conventional lender, it would be turned down.
Customer services available at online finance centers are also better than those of conventional sources. All queries are accepted online through contact us' interface. These queries are answered in no time. Necessary documents for loan are mailed to the borrower. Alternatively, customer service representatives also deliver these to the borrower. Within the given time frame, borrower has to sign the documents. While submitting online finance application, borrower already agreed to many terms and conditions of loan. Interest rate, repayment period, adjustment period etc are some of variables that must be understood without any doubt. In most of cases, loan amount is credited to the checking or saving account of borrower.
It seems that all above factors work in favor of borrower and not in favor of lender. However, it is not true. Each characteristic mentioned above works in favor of lender also. For example, by offering easy and hassle free online application, lender avoids frequent queries of borrower. Cost of online application is much-2 lower than the cost of paper application. These applications can be stored in digital form and thus, less space is required for office functioning. Similarly, fast approvals results in large numbers of borrowers and hence, greater profits. Numbers of borrowers are also increased due to low interest rates.
Caution
All online finance centers do not work in the favor of borrower. There are some centers that have applied exorbitant closing costs and upfront fee to their borrowers. Borrowers with bad credit are charged with higher fees and costs as they have no other option sometimes. Some centers like payday loan centers have been criticized by many experts for adopting predatory behavior. In a nut shell, if any online center promises for hassle free loans along with greatest benefits, one can smell a rat. Dealings should be carried out with such lenders very cautiously. Receiving good faith estimate in advance is a good idea.