The Newest Way to Take a Loan
Taking a loan is something that 22% of Americans have done. For many, loans are the only ways to afford a new house, car, or education. But taking these loans is a long and strenuous process, and they don’t always end up in the person taking the loan being satisfied. All of this leads to the question: Are technology-driven loans the best option for future loan-takers?
Loans. These transactions can set one up for the rest of their lives, but they can also place someone under crushing debt, with high interest rates. Loans are money given to someone from another party. The recipient of the money then has to pay the lender back, generally with some interest. Loans help because they aid in paying for large purchases, like a house, car, or even college tuition. But the debt that they create can handicap someone for the rest of their life if their investments don’t pay off. About 22% of Americans have taken a personal loan in their lifetime, so it is easy to see why they are so important.
Process of Taking a Loan
So, how exactly does one even take a loan? Well, the process is extremely long and complicated. It starts with calculating how much money you need, then you need to check your credit score, so an individual is actually able to take the loan. Then, there are so many options and loan types that a loantaker needs to consider. After that, the individual needs to consider the best loan rates for them, and the best lender. Finally, they need to show documentation and actually accept the loan. For someone inexperienced, this is a long and strenuous process. However, taking the loan is extremely important. This can prove to be a big challenge for many young loantakers.
Using Technology with Loans
We’ve talked about loans, and how difficult they may be. But how can we use technology to make them easier to take? The answer to this question is to apply the newest technology, using a new Peer-to-Peer Lending mechanism where a user can lend money to another user, or making loans more personal for the user. These strategies are being implemented by Fintech lending companies such as Upstart and Lending Club. These companies are also successful, with Lending Club gaining more than 4 million users since 2017. Clearly, these loans have potential to change the way we choose to take loans.
What Does This Mean For the Future:
The next generation of loan takers may not have to go to a bank and use the traditional methods of loan taking. Instead, we may just be able to use one of the Fintech lending companies to take a loan, while simultaneously making smarter financial decisions and getting the best personal rate for each of us.