How you can get the best rate for a personal loan online? When you need cash – whether that’s to consolidate consumer debt, pay for an emergency, or remodel your home – personal loans are usually a very good option to consider. Sometimes called installment loans, these short-term loans generally offer better interest and terms than credit cards or cash advances.
If you’re asking, “Where can I find the best rate for a personal loan online?” you may not know that many lenders are now available exclusively online, serving people like you across the U.S. These online lenders are reputable, may offer better conditions than a traditional bank and allow quick applications via the web or a mobile app on your smartphone.
What’s more, a search for “best rate for a personal loan online” may turn up a number of online lenders who serve your area and offer excellent rates. It’s definitely worth shopping online for a personal loan, even if you eventually turn to a traditional bank or local credit union. Here’s why.
Online Lending is Growing
The number of online-only financial institutions has jumped up dramatically in recent years. Just six years ago, these lenders provided 5% of personal loans; today, they make up a whopping 38% of the market. You may have heard these companies referred to as “FinTech,” which stands for financial technology. Through the use of technology, they’re able to streamline lending processes and create efficiencies that save time and money and offer you a great rate for a personal loan online.
The catch is the growth in this industry has resulted in a lot of competition. In other words, many lenders are hoping for your business, especially if you have average or above-average credit. That drives the companies to make better offers to attract borrowers, which you can take advantage of by shopping around and comparing different lenders.
As well, these FinTech firms specialize in one or two financial services — they focus primarily on personal loans. Large, traditional financial companies offer many services that all generate income, so they can afford to do fewer loans and don’t have to worry about competing with lower rates and better terms. While traditional banks and credit unions do a smaller number of personal loans, they tend to focus on larger loans and bigger balances, and aren’t so concerned about offering you a great rate.
The Economy is Strong
Making loans is risky business, but in a good economy, small lenders can take more risks without significant issues. The rate of people becoming delinquent on payments or defaulting on their loans has remained very consistent over the past few years, coinciding with growth in the personal loan industry.
When borrowers make their loan payments on time, online lenders don’t lose as much in delinquent loans and have more money available to offer better rates and terms. Unlike traditional institutions that don’t assume much risk with lending, these online lenders have risked and won, so to speak, so they’re more willing to take a chance with you. When you search online for “rate for a personal loan online” online lenders pop up promising good terms and fast service.
People are Borrowing More
According the Federal Reserve, the average family or household had $17,100 in personal loans as of 2016. That’s more than double the amount of loans a family typically had in 1992, and the amount is growing. Online lenders know that the odds are you’ll need another loan down the road, and they’re willing to do what it takes to bring you on as a borrower so that they can retain you as a customer when you do need another loan. They also want you to think about increasing your borrowed amount with them, rather than turn to your credit card company or take on a home equity loan. Those are some reasons why they may offer you a better rate for a personal loan online.
Increased Data Gives More Information
No longer are lenders making decisions solely based on your credit score. Instead, they have access to a great deal of data about you and your financial habits. Using their own technology, the FinTech companies can analyze the likelihood that you will pay off your loan on time and in full.
Many FinTech firms are also using artificial intelligence to compare your habits with those of consumers who have paid their loans in the past, and determine if you are a good risk. Through the use of software and digital analysis to determine risk, it’s faster and cheaper to underwrite unsecured personal loans.
Get A Better Rate For A Personal Loan Online
The rapid increase in online companies offering loans, the changing technology that makes underwriting faster and less risky and the future growth of the personal loan industry all make online loans attractive to borrowers with reasonably good credit. So if you’re looking to get some extra cash for debts, expenses or future projects, compare personal loan offers. You may end up with great terms and excellent rates for your unsecured, short-term personal loan.