Borrowing money used to be a privilege for a selected few. This is due to the fact that financial institutions, like banks and credit companies, typically had a rigid process of conducting background checks on borrowers. Thus, it was hard for people with no approved credit history to improve their credit standing and be allowed to take out a loan. In some instances, this has forced credit consumers to turn to informal lenders who charge unreasonably high-interest rates.
Slowly but surely, things in the credit industry are changing. For one, microfinance loans are now available for borrowers who need instant cash. They can also choose the most realistic option since payment terms are flexible. Last but not least, making payments is very easy since there are authorized payment centers everywhere.
Borrowers also no longer need to supply too many supporting documents for their loan request. Creditors simply require basic identification papers, while also verifying the personal and financial information that potential borrowers provide. Everything takes place via an online system, which makes the whole process very friendly for borrowers.
You may read through this infographic by Cashalo to find out more about the current trends and latest technologies in the credit industry.
How New Technologies and Trends Are Changing the Loan Industry
Loan application used to be a complicated process. You had to fill out lengthy application forms, comply with an endless list of requirements, wait for a long time for loan processing and approvals, and the list goes on. Thankfully, those days are over.
Here are the new tools and systems that lending groups or companies are introducing to borrowers.
1. Mobile Wallet
Mobile wallets serve as a prepaid money account where you store your loan credits. You can then use the money from your mobile wallet to pay for your purchases.
Mobile wallet apps are equipped with technology that connects your mobile wallet account to a store’s POS system. Some apps also use the near-field communication(NFC) feature that can tell if you’re in the vicinity of the store. This setup lets you pay for your groceries, bills, parking ticket, and many more items through the app, alongside the store’s POS system.
The growing popularity and functionality of mobile wallets can make it possible for lenders to send your loan proceeds directly to your virtual wallet. You no longer need a physical credit or debit card or any cash amount to pay for your purchases.
2. Online Lending
Online loans are one of the fastest ways to receive funds for personal emergencies or big-ticket purchases. All you need to do is go online, create your account, and submit your loan application together with basic identification documents. Its end-to-end paperless solution in borrowing money makes it a popular option among technologically savvy Filipinos.
There are a number of online lenders in the Philippines, but Cashalo stands out for providing low fixed monthly interest rate of only 4.95%. If you borrow Php2,000, you only pay Php 2,131.48 in 15 days*. Loan approvals also take no longer than 24 hours. Once your loan request is approved, Cashalo will release the funds in as fast as 30 minutes. The funds will be sent to you depending on your preferred receiving channel or method. There are absolutely no hidden charges behind Cashalo’s loan service.
*Terms & Conditions Apply
3. Consumer Financing
Cashacart is the first basket financing in the Philippines that lets you shop for consumer goods, such as gadgets, home essentials and clothes at 0% interest payable up to 24 months. Built inside the Cashalo app, you could use Cashacart immediately after signing up with Cashalo.
With this feature, Cashalo finances your purchase in partner stores nationwide. Your loan could get approved in as fast as 10 minutes. How sweet of a deal is that?
4. Peer-to-Peer Lending
For the longest time, banks and other financial institutions have dominated the industry as traditional money lenders. Slowly but surely though, new models of lending are being developed to expand the options for borrowers.
Peer-to-peer (P2) lending is one such example of this trend. A P2P platform directly connects individual borrowers with individual investors or money lenders. Through the platform, registered borrowers can apply for loans.
Because there is no more intermediary bank or other entities involved in the transactions, you now have access to better repayment options as well as more reasonable interest rates. In some cases, you could even request for payout extensions from the lender.
5. Loan Aggregator
Paying off your financial obligations can be a nerve-wracking experience, especially if you are not strategic enough. With loan aggregation, you have the option to use the services of a network of lenders to help you settle your outstanding accounts.
With loan aggregators, you are provided with a list of loans being offered by different financial institutions. Thus, you might find a loan offer that’s different from the one you originally signed up for. This is because loan aggregators collect the personal information you submit to any prospective lender and make it available for other lending companies, who might be able to offer you a better loan package.
In a way, loan aggregators are helping you come up with as many options as possible by referring you to their network of loan providers. It will be up to you to determine which loans are affordable enough to help you achieve your financial goals.
Technology has many useful and positive applications in the credit industry. Thus, you’ll find many companies introducing innovative products and services to better help Filipinos who are in need of extra money. With flexible and user-friendly new policies and terms, loans are no longer considered a financial burden but a way for Filipinos to cope with money challenges and reach their personal goals.