An upcoming evolution in the financial industry is gradually taking shape. Increasingly, the reputation of banks as a prime source of credit in the economy is becoming less prevalent. The impact of the recent meltdown has massively reduced the resilience of the banking industry, forcing banks to introduce tighter credit measures and reduce the availability of credit, especially for bad credit consumers.
Private lenders have responded to this decline by offering consumers innovative web-based financial options, such as online loans. In fact, this response has catalyzed the emergence and expansion of the online lending industry. The following are some of the key factors that have contributed to the spectacular growth of online loans.
Less Restrictive Qualifying Criteria
In order to effectively reduce the level of risk inherent in credit activities, banks conduct comprehensive evaluations before extending credit. The process is basically a predictive analysis of a borrower’s repayment capacity or ability to repay according to the terms and conditions of the loans. Because the assessment generally involves the use of credit information, those borrowers with less than decent or poor credit histories will certainly find it difficult to qualify for a bank loan. This difficulty is pushing a significant number of potential consumers towards online loans.
The key advantage of securing online loans is that they offer less stringent credit qualifying criteria. This implies that consumers can still get a loan even with a bad credit history.
The ability of the internet and other web-based technologies to increase the speed of communication and business operations has spurred consumers to shift from conventional sources to online installment loans. Definitely, one of the reasons why online loans are experiencing an increase in consumer demand is because they provide easy and comfortable access to short-term finances.