Why Getting a Loan Online is Easier than Applying for a Traditional Bank Loan

Description: Getting a loan is tough if not impossible for most people with bad credit. Fortunately, with the advent of online lending, it is now possible and much easier to get a loan with bad credit.

After years of struggle, the economy is finally returning to its pre-recession shape. But despite the good news, many consumers feel that they have not benefited from this awesome recovery. Individuals and households, especially those who were scarred by the recession, are still struggling to escape the horrible impact of the crisis and get their financial lives back on track.

Given this economic backdrop, it is likely that people will cut back on their spending to avoid shortfalls in their income. Unfortunately, budgeting is not enough. Indeed, some consumers feel that they have little choice but to rely on debt. In today’s notoriously volatile economy, it seems that borrowing money is the only way to cope with the ever-increasing costs of prime commodities and services.

The sad reality, however, is that banks are no longer as lenient as they used to be when it comes to lending. Banks nowadays are not only hesitant to give out new loans, they are also afraid to do business with risky consumers. The global turbulence that nearly caused the banking industry to collapse has caused surviving banks to become more fearful of risks. Since most of these risks come from the failure of many borrowers to repay their debts, bank lenders toughened their lending criteria and screening procedures to filter out applicants with bad credit. Potential borrowers with bad or troubled credit histories are believed to be more likely to default on their loans and therefore pose higher risk to banks.

A common question for many consumers is, “Can I get a loan with bad credit?” or “Can I get a personal loan with bad credit?”

Undoubtedly, the answer is yes.

The growing need of today’s consumers for loans combined with the sharp decline in credit availability from traditional lending institutions such as banks have fueled the emergence of non-bank online lending companies that provide personal loans to a broader spectrum of borrowers including those with bad credit. Unlike their conventional counterparts, online loans are often easy and convenient to obtain. Here are some of the reasons why securing a personal loan directly from an online company is easier and more convenient than going through banks.

The applications process is much faster and less cumbersome

Banks customarily conduct credit assessments to evaluate the financial conditions of potential borrowers. The problem with this process is that it is very extensive and complex and can take a long time. Moreover, because the method relies heavily on credit scores, there is a great chance that those with bad credit may not get qualified.

More than ever before, consumers are turning to online companies to fix income shortfalls and financial emergencies rather than make major purchases. Online lending exists to address this evolving need.

Since most web-based lending companies don’t perform substantial financial evaluations on credit applicants, getting a personal loan online is often less cumbersome and much quicker than applying for a bank loan.

It involves no collateral

Banks not only want a clean credit report, they also want security. This security usually comes in the form of collateral. The use of collateral provides banks with additional assurance that the loans will be repaid. But apart from that, banks also use collateral to make up for the losses that might result from default.

In today’s incredibly tight credit market, more and more consumers are asking themselves, “Can I get a loan with bad credit without any collateral?”

The existence of online lending not only makes it possible for consumers to acquire a bad credit loan; it also simplifies the entire lending process by not requiring any collateral.