Lending Apps: the Good, the Bad, the Better? - Learning the basics of lending money online (Daily Blog # 11)

Hey Guys! Welcome to my daily blog # 11. Today, I'll be talking about online lending. Yes, you heard it right - lending, i.e. granting and being granted loans through online platforms. Lending apps are surely convenient to use, but what are the possible consequences of using them? How do we, as users, ensure our security and safety? Are all lending apps trustworthy or do we have to be cautious to protect ourselves from being scammed?

Back in the old days, getting a loan is not an easy task; you have to prepare all the necessary documents, proofs, and records to get the approval of a bank or financing company. The release of results also takes a lot of time, usually several days or weeks. Fortunately, recent breakthrough technologies have enabled us to make transactions in just one click, without even leaving our seats. Now, we don't have to go to a physical bank for such transactions; a digital device and internet access is sufficient. However, through the years, we have seen how technology has corresponding trade-offs; for every convenience and comfort we experience, there is a price to pay.

To make wise and informed decisions regarding these lending apps, it is necessary to weigh the pros and cons, which are listed below:

The pros

1. Online lenders don’t have any physical branches, thus offering borrowers one big advantage — convenience.
   Submission of loan applications online, such as a paystub or driver's license, is a common feature in both online and offline lenders. However, offline lenders require signing of the final documents at an actual branch. Conversely, online lenders process the entire loan application online.

2. There is a preconceived notion that transacting online carries greater danger than doing it physically, which leads to hesitation in submitting personal information online. However, it should be made clear that offline lenders are not an exception - they can easily store your submitted information in an online database, thus posing an equal risk to customers.

Thus, the choice between an online and offline lender all boils down to credibility and reputation. It is advisable to do some research regarding the lender, and check for complaints filed with the Securities and Exchange Commission - Corporation Finance Department.

Your personal information, which includes employer, income, and outstanding loans, is required by lenders to verify your financial credibility and responsibility. Sharing this sensitive information is critical, but the risk can be lessened by making careful and decisive steps.

1. You probably have experienced once when you're in a mall, and someone tries to pitch you their credit cards, convincing you to get one. The same thing can happen with online lenders; inquiries can turn into sales pitches and you might end up buying a checking account or financial products you did not even intend to purchase in the first place. Most online lenders do not make such advertisements and pitches; their focus is on lending.

The cons

As aforementioned, there is a price to pay for every advantage. Here are the drawbacks with online lenders:

1. Online lenders may choose not to issue loans in particular states. In the case of Iowa, residents may not use Lending Club (as of January 2018).

2. Fees may be charged by some lenders upon approval of loans. For instance, an origination fee of at most 5 percent of the borrowed amount may be charged by Prosper. It is worth noting that borrower rating determines the fee to be charged. Higher ratings mean lower fees.

After discussing the pros and cons of online and offline lenders, we'll be looking into some of the lending apps that you may find in the App Store.

1. Moola Lending - A Philippine-based financial technology company powered by the Doctor Cash international line of fintech companies and focused in online micro- and consumer financing, Moola Lending Corporation is one of the first online lenders in the country.

[Photos taken from www.moola.ph]

1. Tala - For four years, Tala has been providing micro-loans in three countries, namely Philippines, Kenya, and Tanzania. Their principle is to empower people by giving them choice and control over their finances so that they may start their own entrepreneurial ventures.

[Photo taken from the www.tala.ph]

Applying for loans can be a smart decision to finance a start-up business. Weighing the pros and cons, investigating the credibility and reliability of lending companies, and ensuring your financial capabilities to pay on time are ways to reduce your risks and increase your chances of success.

Although borrowing money is not necessarily a bad choice, I would still suggest finding different ways to earn without incurring debts. Continuously learning, adapting to the changing environment, particularly the fast advancing technology, and exploring various avenues of opportunities is the key to success in any kind of venture.

Likewise, Steemit has proved to be an innovative avenue for people with a passion for blogging and sharing quality content, whilst allowing them to earn income. Cryptocurrency also offers a great opportunity for people who want to jump-start new ways to earn.

Ultimately, the best investment that we can have is faith. Thus, before setting out on a journey to new ventures, pray to God and ask for His guidance.

Your Steemit Buddy Gedz :)

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P.S Thank you @fycee for giving me a great topic :)

Sources:

https://www.creditkarma.com/personal-loans/i/personal-loans-online-lenders/
https://www.forbes.com/sites/forbestreptalks/2016/08/29/how-tala-mobile-is-using-phone-data-to-revolutionize-microfinance/#2576f8f32a9f
https://www.moola.ph
https://www.tala.ph