Traditional Bank Loans Are Going Out Of Fashion: Here Are The Reasons Why

    • If you’re looking into starting a business or a company in 2018, the current financial landscape in Australia would be a Godsend for you. Online loans and other alternative loaning channels are making waves today and their advantages over traditional bank loans have been staggering. For those who can’t qualify for bank loans due to numerous, unforeseeable reasons, online loans have become the viable option for those who need quick cash without the exhaustive processes involved in bank loans.

      At &Solved, we open the channels to a good alternative to the traditional bank loan: a line of credit that we can help you process online.

    • What is a line of credit and why has it become a great alternative to bank loans?

      A line of credit works similarly to a credit card as a flexible means of borrowing money. You can use this credit line by simply writing a post-dated cheque or in some cases, write off a set of assets as collateral. You can keep using this credit line as soon as you pay off the borrowed money, and the best part is you don’t have to make any payments until you use your credit.

      As opposed to a personal loan from a bank, you have to start paying the entire amount plus interest as soon as you are granted the loan. You will be given a fixed schedule of payments that will reduce the payment until the loan is paid off.

      Aside from stringent requirements, the maximum loanable amount in a personal loan would be completely dependent on your credit score. The interest that you have to pay would also be based on the entire lump sum amount that was granted to you.

      With a line of credit, you only need to pay the interest of the amount you withdraw, not the entire credit line. Payment may not be scheduled like in personal loans as long as you pay all of the borrowed money and interest by the end of the term. Most line of credits, like online loans, are classified as unsecured loans which is why they can be approved faster than traditional bank loans. However, securing a line of credit with collateral can make the interest rates lower and the credit limits higher.

      Online loans as an alternative to bank loans have become popular across the world. Australia is no exception. According to a study published by Equitise in 2015, Australia is on the precipice of a growing global phenomenon wherein technology is being used to invest and manage assets like never before.

    • 5 things to consider when choosing between a line of credit and a personal bank loan


      • Requirements Banks prefer conservative investments, and this makes it difficult for small and startup businesses to secure loans. Alternative lending channels, on the other hand, were established to cater to the underserved market. Approvals are much faster due to less stringent requirements, which makes it perfect for people who need quick cash.
      • Terms Alternative lenders charge more for borrowed money, making them perfect for higher-risk yet flexible investments. Banks may have lower interest rates compared to credit cards but approval rates remain low.
      • Credit Maximums Although it is much more difficult to qualify for personal loans, banks usually grant higher loans at cheap interest rates. Alternative lenders can also give huge loans, even breaking the one million mark, but since they cater to smaller businesses, they also grant loans that are smaller compared to banks.
      • Collateral Both banks and alternative lenders offer secured and unsecured lines of credit. The difference between them is that alternative lenders rely more on unsecured ones. Banks tend to grant loans by securing assets such as working equipment, real estate, and inventory. Some banks also offer unsecured lines of credit, but these are often granted in the smallest amounts for lesser risk. Some alternative lenders also offer loans backed by assets and existing financial accounts, but line of credits from alternative lenders tend to be more unconventional.
      • SpeedAlternative lenders beat banks by a mile when it comes to speed of processing. They have faster and more efficient underwriters and they are quicker to offer loans. This is because alternative lenders rely on algorithms and technology that aids in automating the approval process.
    • Securing a loan doesn’t have to be a chore

      Nothing should stop an entrepreneurial mindset. These new alternatives to money lending have opened vast opportunities for individuals who want to build their small businesses and start-up companies without the pressure of tight financial requirements and spotless credit. If you’re looking for a financial lending company that can give you flexible low-interest loans to help you reach your dreams, our financial consultants at &SOLVED are always ready to help you.