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Top 5 Lending Options

September 12, 2018 by MoneyKey

emergency fund

Today, more and more lenders are offering their services online to meet the growing demand of consumers who need unsecured loans. In the United States, Canada, Western Europe and Brazil, more than 50 percent of loans are now taken out by consumers through online sources. This trend is likely to increase in years to come. If you would like to explore an online lending option, here are some of the common reasons to choose one:

  1. Quick Approvals: Some online lenders can approve your loan in minutes; others may take days, depending on the type of loan you choose and other criteria.
  2. Elimination of paperwork: There is little, or no paperwork involved in processing an online loan. The lenders may ask you to provide a few documents to prove your identity and borrowing eligibility. Some of these documents may include a birth certificate, employment letter, proof of income, evidence of social security payments, and other relevant documents.
  3. Round-the-clock availability: While conventional banks offer loans only during banking hours, online lending platforms are often available 24/7.
  4. No Collateral: In most cases, the lender does not require any collateral. For instance, some payday lenders assess your likelihood of repayment primarily based on the amount of your next paycheck. Other terms used to describe online money lending include ‘online alternative money lending’ and ‘digital retail lending’. Lenders can offer loans in a variety of ways and each option listed below has its pros and cons.

Top 5 online money lending options

#1 Direct Lenders

Direct lenders provide the funding for their loan products as opposed to non-direct lenders who source the funding from third-parties. Whether the funding is direct or through a third party, the loans still need to be paid either within a month or over multiple installments on each payday. Installment loans, flex-pay installments, lines of credit, and payday loans are some of the products direct lenders offer.  Payday loans are the most common amongst all these products that direct lenders often offer.

After you’ve been approved for a payday loan, a lender will typically transfer the money into your bank account the next business day. The interest rate and fees of each loan varies, depending on the borrower’s state of residence and the lender’s product.

Payday loans are also known as payday advance loans or cash advances. Cash advances are sometimes provided against a prearranged line of credit. A popular online lender like Moneykey offers installment loans, payday loans and lines of credit. It’s a direct lender in most of the states it operates.

#2 Peer to peer (P2P) lending

Peer-to-Peer lending is when borrowers take out loans from individual investors or businesses through an online marketplace platform. The platform displays the borrower’s profile to the lender who determines, based on risk, whether to fully or partially fund the requested loan. The approval process and other criteria are usually determined by the lender, whereas the marketplace platform will provide general guidelines for the parties to interact.

#3 Crowdfunding

Unlike direct lending and P2P lending, crowdfunding provides capital for a community or business cause. As a borrower, you propose an idea or product that you think will be good to develop. If investors like your proposal, they will review your need and offer money. The investors could be a small group of people or large crowd since no single lender would fund a cause fully.

Crowdfunding is not like a traditional loan as the borrower may not pay back money to investors. Many crowdfunding platforms are reward-based so a borrower may be required to offer investors a reward, donation or equity in a project. For example: if your idea materializes and becomes successful, the investors can get a portion of your profits, shares in your organization, etc.

Crowdfunding platforms often allow you the flexibility of deciding whether you want fixed funding (i.e. you only receive money if you meet your set funding goal, which means you have to wait until the end of the campaign and if you don’t reach your goal, all money pledged towards the campaign will be returned to the lenders) or flexible funding (i.e. you get to keep any money raised, even if you don’t reach your goal and can use funds as they come in instead of waiting until the campaign is over).

#4 Merchant Cash Advance

This is a cash advance that’s only available to small businessowners. Loans for small businesses can be used for the purchase of a new asset, repayment to a creditor, or working capital.

The Merchant Cash Advance (MCA) provider offers the funds to a business based on its projected revenues and credit card sales. Cash advances and installment loans are some of the products MCA providers offer. In comparison to other forms of online lending, this method has a longer approval process with partial business collateral.

#5 Third-party lending

This type of lending is a combination of direct and marketplace lending. The online lender invites a limited number of lenders to arrange credit products for borrowers. The lenders could be banks or institutional lenders. At times, some retail banks come together to create a digital conglomerate. Some high net-worth individuals could also participate in few cases. The number of borrowers seeking financial help is not limited. The lending website connects relevant borrowers to the lenders.

Unlike most of the traditional lending options, online lending keeps the loan approval process swift, paperless, and convenient. Online lending platforms increase automation for the lender and adds transparency for the borrower.

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Not all applications are approved; duration of approval process may vary. Credit limits/loan amounts are subject to further verification criteria. If you are a returning customer, loan amounts may vary.

*If approved, any requested funds may typically be deposited into your bank account the same business day; timing of funding may vary by product and state. The date and time funds are made available to you by your bank are subject to your bank's policies. For specific funding cut-off times, click here.

**You may request a draw from your Line of Credit at any time, so long as you have available credit and your account is in good standing. In the State of South Carolina, you can withdraw the total credit available to you all at once, or in smaller amounts over time as you need it, with a required minimum draw of $610.

As you move through your credit journey, your account may become eligible for reduced charges and/or increased credit limits/loan amounts based on good payment history over time. You will receive notices, as applicable, regarding your individual circumstances and eligibility.

Depending on your state of residence, applications submitted on this website may be originated by one of several lenders, including: CC Flow, a division of Capital Community Bank (CCBank), a Utah Chartered bank, located in Provo, Utah, Member FDIC. The CC Flow Line of Credit is provided by CC Flow. Additionally, CC Flow maintains critical control over loan origination, underwriting approvals, and regulatory and compliance oversight management. MoneyKey is an authorized servicer of CC Flow. This means the CC Flow Line of Credit is available through MoneyKey and you will maintain your CC Flow Line of Credit account through MoneyKey.

Product availability varies by state. To see loan products offered in your state of residence, please visit our Rates and Terms page.

MoneyKey – TX, Inc. is licensed as a Credit Access Business (CAB), License No. 16641-62815, by the Office of the Consumer Credit Commissioner and registered as a Credit Services Organization (CSO), Registration No. 20110150, by the State of Texas. All loans for which MoneyKey acts as a CSO/CAB are funded by an unaffiliated third-party lender and serviced by MoneyKey. In the State of California, MoneyKey – CA, Inc. is licensed by the Department of Financial Protection and Innovation pursuant to California Deferred Deposit Transaction Law License No.1004516.

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