Loans and Technology: How It’s Changing the Loan Approval Process

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Most people will need several types of loans throughout their lives including a student loan, a car loan, a mortgage and a personal loan. It’s was not too long ago that acquiring any one of these loans from a traditional bank was a drawn-out process. You had to wait at least a week or two after providing the lender with everything but the kitchen sink just to find out whether they would approve you or not. And, then, if they did approve you for the loan it was another week or two before you were able to receive the funds. Today, in the age of instantaneous, the process of getting a loan as well as many other things has drastically changed. Not only can you get results quickly from your phone or computer, but you can also receive a loan even if you have less than perfect credit.

Personal Loans

Personal loans as a general rule are unsecured, meaning the bank doesn’t have anything to use as collateral in the event that you default. Because of this most traditional banks do a thorough background check, pull up your credit report and verify income through recent pay stubs and tax returns. If you have excellent credit you can get a pre-approval rather quickly. However, providing the bank with the required documentation can make the process take a few weeks or longer. Another type of personal loan known as a short-term loan is something that non-traditional lenders offer online. With a few clicks of your mouse, you can access and then complete the application. From there, the approval process is usually within a day or two versus a week or two and once approved, many will deposit the funds within 24-hours directly into your bank. These quick cash loans are beneficial to those who have a few blemishes on their credit report, and who would otherwise receive a denial from their local bank. While you won’t be able to borrow 10s of thousands, you can borrow a thousand or so to cover an emergency.

Secured Loans

Secured loans like a car are easier than ever to get either an approval or denial. Many of the car dealerships have websites wherein you can apply and receive a pre-approval based on your information within 24-hours. Of course, you still need to provide the dealership with your personal information, but if you have your paperwork in order, you can usually drive away in your new vehicle within just a couple of days. A mortgage is also a secured loan and while you can get a pre-approval in some cases in literally minutes, the actual payout of the finances still works much the same way. You still need an appraisal by the bank and the usual required documents like recent pay stubs, and a few years of tax returns. Plus, they will pull your credit report from the three top agencies and make their final decision based on all of the above.

Today, with the advancements in technology, how you do many things is now rapidly becoming easier. Similarly, the process for applying for a loan and getting an approval by a bank or another type of lender is also easier, with a fast response and less waiting time you can close on your home, make repairs or renovate or take care of an emergency.

In : Finance

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