What Are Online Lending Networks?

In 2019, the global market for digital lending platforms was worth USD 5.58 billion, and it is expected to grow to USD 20.31 billion by 2027, with an annual growth rate of 16.7% from 2020 to 2027. What are online lending networks and how do they help businesses? Let us find out.

Table of Contents:

• What are online lending networks?
• Benefits of online lending networks
• Steps to Secure a Loan Through an Online Lending Network
• Who can benefit from online lending networks?
• Final thoughts 

The growth of online lending networks has changed the personal loan market, making it easier and faster for people to access different loan options. These platforms simplify the process by allowing users to compare offers from several lenders with just one application, saving both time and effort.

In 2019, the global market for digital lending platforms was worth USD 5.58 billion, and it is expected to grow to USD 20.31 billion by 2027, with an annual growth rate of 16.7% from 2020 to 2027. This growth shows how more people are choosing online platforms because of their convenience, speed, and ability to serve borrowers with different credit scores.

For example, someone with a fair credit score of 650 can use an online lending network to find competitive loan offers from various lenders, something that would take much more time and effort than using traditional methods.

These networks are especially helpful in emergencies. For instance, a person needing $10,000 for unexpected medical bills can use a network to compare offers tailored to their credit profile and possibly receive the funds within one business day.

Popular platforms like LendingTree and Credible have become well-known by offering customised loan options, flexible terms, and clear fee structures. As more people use these networks, their role in helping borrowers make informed financial decisions and access better loan rates highlights their importance as a major innovation in the lending industry.

What are online lending networks?

An online lending network, also called a loan marketplace, is a platform that helps borrowers connect with multiple lenders. With just one application, borrowers can access loan offers tailored to their financial needs and credit scores. This is different from the traditional method, where borrowers have to apply to individual lenders, which can take a lot of time and might involve multiple credit checks.

These platforms use details provided by borrowers, like income, employment status, and credit score, to find lenders offering the most suitable loan options. Borrowers can then compare the loan terms and choose the one that best matches their financial goals.

The process of getting a loan through an online lending network is simple:

1. Submitting an application: Borrowers fill out an online form with information about their financial situation and loan needs. Most networks perform a soft credit check at this stage, which does not affect the borrower’s credit score.
2. Reviewing loan offers: The network reviews the borrower’s profile and connects them with partner lenders. Borrowers receive a list of loan offers, showing rates, terms, and fees, which they can compare to find the best option.
3. Choosing a loan: Once a borrower picks a loan, they are directed to the lender’s website to complete the application. Some lenders provide the funds within one business day, making this a quick and convenient option for those who need money fast.

Benefits of online lending networks

Online lending networks offer several advantages, making them an appealing choice for many borrowers:

1. Convenience and efficiency: Online lending networks make borrowing easy and convenient. Borrowers can explore multiple loan options from the comfort of their homes, without the need to visit different banks or financial institutions. The process is simple: one application is shared with several lenders. This saves a lot of time compared to filling out separate applications for each lender. Additionally, these platforms provide loan offers quickly, helping borrowers make informed decisions without delays.

2. Broader access to lenders: These networks work with a wide range of lenders, including banks, credit unions, and online-only financial companies. This variety ensures borrowers with different credit scores, incomes, and financial situations can find suitable loan options. Borrowers with excellent credit can get competitive rates and favourable terms, while those with lower credit scores are matched with lenders willing to offer loans based on their specific needs, reducing the frustration of multiple rejections.

3. Prequalification without credit impact: Many online lending networks allow borrowers to prequalify, meaning they can view potential loan rates and terms without undergoing a hard credit check. This ensures that their credit score remains unaffected. Prequalification helps borrowers narrow their choices to lenders most likely to approve their applications, saving time and avoiding repeated denials.

4. Transparency in loan comparisons: Online lending networks allow borrowers to compare loan options side by side. Details like interest rates, repayment terms, fees, and other conditions are presented clearly in one place. This transparency helps borrowers make informed decisions and choose the loan that best suits their financial needs. Comparing options often leads to finding loans with lower annual percentage rates (APRs), saving money over time.

5. Reduced risk of denial: These networks help borrowers avoid wasting time on applications that are unlikely to be approved. The platform matches borrowers with lenders suited to their credit profiles and financial needs, increasing the chances of approval. This targeted approach makes the borrowing process more efficient and satisfying.

6. Flexibility and accessibility: Online lending networks are available 24/7, allowing borrowers to apply for loans whenever it suits them. Whether late at night or during a lunch break, the process can be completed without being tied to office hours. Most platforms are mobile-friendly, so borrowers can apply, review offers, and accept loans directly from their smartphones.

7. Quick loan disbursement: Many lenders on these networks offer fast disbursement of funds, often within one business day of loan approval. This speed is crucial for borrowers facing urgent needs like medical expenses or unexpected repairs.

8. Customised loan options: Online lending networks analyse a borrower’s financial details and match them with lenders offering loans tailored to their specific requirements. Borrowers can find loans with flexible repayment terms, different amounts, and competitive interest rates. For instance, someone looking to consolidate debt can find lenders specialising in debt consolidation, while others financing a large purchase can choose loans with extended repayment periods.

9. Inclusivity for all credit scores: Unlike traditional lenders that often prefer borrowers with strong credit histories, many online lending networks work with lenders who cater to those with bad or fair credit. This makes it easier for individuals with poor credit to find viable loan options. The network helps reduce the stress of borrowing by ensuring these borrowers are presented with realistic choices.

10. Cost savings over time: By comparing multiple lenders, borrowers are more likely to secure loans with lower interest rates and fewer hidden fees. This can lead to significant savings over the life of the loan, making online lending networks a smart financial choice.

Steps to Secure a Loan Through an Online Lending Network

Using an online lending network involves a few straightforward steps:

1. Complete the online application: Provide personal and financial details, including income, employment, and the desired loan amount. Be prepared for a soft credit check or, in some cases, a hard credit check.
2. Compare loan offers: Review the options provided by partner lenders. Consider factors such as interest rates, repayment terms, and any associated fees.
3. Select a loan: Choose the loan that best meets your needs. Follow the lender’s instructions to finalise the application, which may involve submitting additional documentation.
4. Receive funds: Once approved, funds are typically disbursed directly to the borrower’s bank account. Some lenders offer rapid disbursement, making funds available within one business day.

Who can benefit from online lending networks?

Online lending networks are ideal for individuals who value convenience and are comfortable navigating online platforms. These networks are particularly beneficial for borrowers with less-than-perfect credit, as they can connect with lenders willing to work with their financial circumstances.

Borrowers who prioritise efficiency and the ability to compare multiple loan options in one place will find these platforms advantageous. However, those unfamiliar with digital processes or who prefer in-person support may need to consider alternative options.

Final thoughts 

Online lending networks have changed the way people borrow money, making it easier and more convenient to get personal loans. These platforms allow borrowers to compare several loan options with just one application, helping meet different financial needs and credit situations. However, it’s important for borrowers to use these networks carefully, focusing on security and clear terms.

Whether borrowing money to combine debts, pay for a big purchase, or handle unexpected costs, online lending networks can be very helpful. By doing proper research and thinking carefully, borrowers can use these platforms to find the loan that best suits their needs.