Personal loans have long been thought of as a last resort when unexpected costs or major life events come up. However, the rise of alternative lending has changed the way consumers think of this option.
Born of necessity
The main reason for the alternative lending boom? Simple necessity. In the aftermath of the Financial Crisis, banks faced tougher lending regulations, opening up a market for newer, disruptive platforms. Companies like Lending Club and OnDeck have already gone public and more IPOs are expected in the future. Foundation Capital, in fact, puts the industry’s absolute value at $1 trillion.
The convenience, transparency and hands-on nature of alternative lending technology has also transformed the process of taking out a personal loan. Before, a personal loan required taking a trip to the bank, dealing with bank personnel, filling out tedious paperwork and hoping for the best. The only way to ensure you are getting the best rate available means- you would need to rinse and repeat this process at various banks.
It’s understandable, then, that the idea of taking out a personal loan to pay for something like a family vacation is not part of Americans’ current lexicon. In the past, by the time borrowers got through with the hassle involved in rate shopping, they likely needed funding for another vacation.
A shift in thinking
Statistics generated by alternative lenders such as Lending Club show…
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