As technology moves forward, numerous businesses and entire industries have seen the need to adapt to continue to be able to meet the needs of their clients. Storefront lending is not the exception to this trend, and 2020 has only accelerated the need to provide online options to be able to reach a wider number of customers. But are there any downsides to the change to online lending? And how has the COVID-19 pandemic truly impacted this sector?
- Storefront Lenders or Online Lenders? What is Better?
For a borrower, deciding to get a loan is not easy. It involves getting into debt, and the myriad of options available can be overwhelming. One of the decisions to make is whether it is better to approach a storefront lender or an online lender. At the end of the day, it is going to come down to the circumstances and preferences of each individual.
People who enjoy person-to-person contact and are more comfortable talking about money matters in-person will be more inclined to go to a storefront lender. One of the upsides of this option is that people get to solve their doubts immediately.
Another upside of storefront lenders is that they immediately let the borrower know if their loan has been approved or not. This also means that the person can leave with their money immediately, something that might be necessary depending on how urgent their need for money is.
That said, online lenders have many benefits as well. One of the benefits of getting loans online is that the person doesn’t need to leave their home to make the request. They can simply use their laptop, tablet, or even their phone to make it. However, they might not get the money immediately as the request needs to be processed, which takes place within 1-2 days.
Similarly, many online lending sites use chatbots, which while helpful can sometimes lack the human-to-human interaction craved by many customers. That said, some clients prefer a more detached approach, and online lending is the perfect option for them because of this.
Lastly, security can also be a determining point for many people. Storefront lenders have a physical location where the borrower can go to get a payday loan. Instead, online lenders only exist online, and determining if they are trustworthy or not can be a challenge.
- How to Choose the "Right" Lender?
Choosing the right lender is all about understanding what your needs are and studying the available options. There are specific needs you should think about and consider before you choose between online and storefront lenders.
One thing is accessibility. If you live in an area where there are no storefront lenders and your transportation options are not the best, then an online alternative might be the best idea. Also, if you are worried about social distancing, this is a way to ensure you minimize your contact with others.
However, if you have a lender close to your home and you have good references about their practice, then you should think about using their services instead of an online option. This also applies if you are in a rush to get the money.
Another aspect is safety. Whether you are choosing an online or a storefront lender, you should try to find out a bit more about them before using their services. Be it referrals, online reviews, or even checking their state certifications, this is a great way to make sure you are in good hands during the borrowing process.
Your credit might also be something to consider in this setting. Traditionally, brick-and-mortar lenders tend to be more conservative, asking for better credit than their online counterparts. However, while online lenders might take you even if you don’t have the best credit, interest rates are bound to be higher. Also, these rates tend to be fixed when it comes to online lenders whereas you might find some room for negotiation when it comes to a physical location.
- Storefront Lending and Coronavirus
Storefront lenders had been adapting to online services since before the COVID-19 pandemic. Usually, a hybrid model takes place first, in which an online platform is created but the in-person part of the business continues to exist.
However, some lenders saw that they had fewer expenses in the online setting and, even if the risk was higher, it could be entirely worth it. This led to many of them choosing to close their physical stores and focus only on online lending, which people seemed to prefer.
This all skyrocketed during 2020 when lockdowns and social distancing rules made it exponentially difficult to go to a storefront lender. While the risk is now a lot higher due to the bad economic position in which many individuals find themselves, adapting to the online option is a decision that could make or break any of these lenders.
This trend is expected to continue even after a vaccine or definite treatment is found, as people are now more comfortable than ever when it comes to dealing with important financial issues online.