What are internet lenders?

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Also called an online lender, an internet lender is typically a bank, financial institution or finance company that provides online loans to borrowers on the web. Depending on their level of web integration, credit unions, credit card companies, mortgage lenders and financing companies can be considered internet lenders.

When the World Wide Web and ecommerce really began to take off at the turn of the century, the few lenders who had a web presence tended to focus on advertising, generating prospects or providing basic information to web visitors. These early pioneers usually just collected preliminary loan information, at most. Customers would still have to visit the lender’s offices or complete paper documents via regular mail.

The continued growth of ecommerce and the world wide web in the last decade has allowed banks and finance companies to become true internet lenders by allowing businesses and consumers to obtain financing almost completely online.

Loan products offered by internet lenders

Internet lenders now offer a wide variety of consumer loan products through their websites, including the following lending programs:

Internet lending process

Although some offline interaction may still be required, today’s internet lenders can do most, if not all, of the following lending functions via the internet:

  • Application. Almost all internet lenders have online application forms that allow prospective borrowers to complete and submit loan or credit applications via the lender’s website. In addition, many of today’s online forms provide tips as consumers go through the form and check for errors in real-time.
  • Automated underwriting. Many internet direct lenders also use and maintain “decisioning” programs that evaluates the applicant’s data, along with supporting data automatically pulled from credit reporting sources, to determine the applicant’s eligibility and qualification for the lender’s loan programs. These programs are often robust enough to make firm loan offers or provide loan approval commitments to qualified applicants.
  • Loan closing. Traditional loan closings used to require the borrower’s physical presence at the lender’s offices or a closing agent’s facility. Many of today’s internet creditors and lenders allow loan agreements to be prepared, processed and signed digitally.
  • Funding. Once a loan is fully approved and all financing conditions have been satisfied, many internet lenders can also wire funds directly to the borrower’s account.

With internet personal lenders, the approval, contract signing and funding can all be done online. Automobile and mortgage loans typically require additional steps, with the closings usually performed at the car dealership or or the offices of the home seller’s closing agent.

Nevertheless, the above internet lending features mean that consumers shopping for a loan are able to enjoy the benefits of convenience, speed and potential savings.The ability to shop from the comfort and security of their homes or offices, often at any time of the day or night, has replaced the need to visit physical bank branches to apply for a loan.

At the same time, automated underwriting has reduced the waiting time for many loan approvals from days (or weeks) to mere minutes or even seconds.

Online shoppers can also use the web to compare loan offers from multiple lenders or financing companies to find the best available deals.

Disclaimer: NetCredit is a direct personal loan provider and does not provide financial advice, nor does it vouch for any vendor or service mentioned on our NetCredit personal finance blog or online consumer loan glossary. Always research and perform due diligence on any service provider or vendor before deciding to use them, and we recommend that you speak with a financial advisor regarding all decisions that will affect your finances.

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