As technology continues to advance, opportunities for greater efficiency in industries such as mortgages and loans continue to increase.
Today, the mortgage industry is experiencing increased utilization of decision logic, robotics and automation to improve the mortgage process from sluggish to a more productive environment with a special focus on customer experience and data integrity.
Thanks to AI, Fintechs in countries like Zimbabwe, Poland, Spain, etc. can now offer loans based on your Social Media platforms. This has completely changed the process of how people borrow money in some of these countries, such that conventional banks are also creating their own loan apps to get a piece of the pie.
Read on to learn how to borrow money without talking to a human.
Is AI the Future of the Lending Industry?
The days of walking to a bank to get a loan approved are long gone thanks to AI. In most countries, you are no longer required to visit a bank to get loan approvals. With the help of cutting-edge technology, banks can now determine your credit score accurately without meeting you.
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Traditionally, conventional lenders such as banks use your payment history, credit line amounts and credit history length to calculate your credit score. This enables the lender to calculate a viable interest rate and how likely you are to repay the loan.
If your credit score is deemed to be low, the lender considers you to be a risky borrower. Anytime this happens, your loan application is either denied or you qualify for the loan but at a higher interest rate.
Digital lenders are not governed by the same principals. They believe that the traditional method of evaluating an applicant’s creditworthiness is flawed as it uses only a few factors to evaluate creditworthiness.
With this in mind, digital lenders are now using a process that evaluates thousands of data such as employment history, educational certifications and trivial details such as your messaging habits, location patterns, and browser history to evaluate your creditworthiness.
Online lenders such as Upstart are using machine learning algorithms to correlate customer data and determine whether the applicant is being honest. A large percentage of applicants tend to lie about their income when applying for online loans.
The lenders try to verify this information by using machine learning algorithms to search for hidden patterns in employment history. This is helpful to applicants with low incomes and limited credit history.
How to Borrow Money Online
Access to loans has been made easier with the emergence of online lenders. You can now borrow money without collateral and it takes about a day to get the funds. Most of these lenders are lending even to applicants with low credits scores.
The only requirement is that you have to prove that you are able to pay the loan. Below are some fast loans.
Short Term Loans
Also referred to as payday loans, short-term loans are easy to access and have a short repayment period. The loan requirements are not as strict as those of traditional loans but the interest rate is significantly higher.
The best way to minimize your loan repayment cost is by borrowing only what you need and choosing a short repayment period. Typically, shorter repayment periods have lower interest rates.
To avoid being trapped in an unending cycle of debt, consider other alternatives such as:
i. Side jobs- sign up for jobs that will supplement your main income. It can be food deliveries after your work shift or sell any unwanted items in your house.
- Payment extensions- if you are behind on your bills, you can request for a payment extension. If that doesn’t work, you can negotiate with your bill provider for a longer payment plan.
iii. Credit unions – ideally credit unions offer programs where part of the loan payment goes into the customer’s savings account. The savings become available once the loan is repaid.
The trick to getting a good deal is looking for a lender that offers a flexible payment plan. For example, loans Canada offers a payment schedule of up to 12 installments
Most people are focused on how to get a quick loan instead of looking for loans with favorable payment plans. Personal loans offer higher amounts than short-term loans and credit cards. They also have lower interest rates.
If you can wait for a few extra days to use the funds, then personal loans are your best option.
Online Auto Loans
You can use your car to secure a loan from online lenders. Your car serves as the collateral where you maintain full use of your car as you service the loan. The interest rates for such loans are often low since the loan is secured.
Benefits and Downsides of Fast Loans
Some of the benefits of fast loans include:
• Wide range of options- The online lending industry has many lenders such that your options are unlimited. All the details are provided online thus making it easy to compare interest rates, payment plans, and cost.
- Easy application- the application process for most online lender takes less than 20 minutes.
- Fast approval- loan approvals take less than a few hours to a single working day. Once the loan is approved, the funds are sent to the applicant’s account.
The downsides include:
• High fees- short terms loans typically have high-interest rates since most of these loans are unsecured.
- Short payment terms- online loans often have short payment plans and any missed payment results in extra charges. Before applying for a loan, make sure that you are in a position to pay it as stipulated in the payment plans.
- Disreputable lenders- if you are not careful, online loans can trap you in an unending spiral of debt. Be sure to confirm that the lenders are authorized to offer loans before applying for a loan.
Knowing How to Borrow Money Online Will Give You Better Access to Short Term Loans
Now that you know how to borrow money online, what details are required to approve your loan? Once you choose a lender there are a few details that are required:
• Personal details such as your name, contact information, social security number, date of birth, etc.
• Financial details such as your employment history, income, and government benefits if any.
• Banking details such as your checking account or bank’s routing number where necessary
Read more on our blog about how you can grow your business.