The New Face of Lending: Think Outside the Bank

If there ever was an excellent example of fulfilling a need, the new lending landscape is it. A few months ago I was looking into getting a car loan. As this was my first car purchase in (garble-garble) years, I was revved up to personally test the lending waters. I did what I advise everyone to do—head first to or to shop around for rates and terms.

But, since sometimes you can get the best rate by going with your local bank or credit union where you do most of your banking (they like to keep good customers, or so I thought), I headed there next. I called my bank rep and got blown off until the next day. She mumbled something about paperwork.

Now, I’m sorry, but I’m one of the now-now-Generation. If everything is at the click of a mouse, I certainly don’t want to have to wait until the next day to talk to someone about my loan, especially since I have great credit. So, I let my mouse do the walking and found an online-only lender who—without one piece of paper, just several online forms, a credit check and one eight minute phone call—was ready to transfer the funds into my bank account by 9 A.M. the next morning. The best part: a low, fixed (really fixed) discounted interest rate for arranging automated payments online, and no prepayment penalties.

I bet that if I had spent even more time loan ‘shopping’ I could have found similar or even better deals with other banks, but what I needed that day was the best deal I could get, quickly. And a new kind of lender stepped up to the plate. These changes in the lending industry can work for us in the sense that more choice means more competition and therefore better deals. Comparison shopping sites scour all types of lenders, not just brick-and-mortar. Should you choose to venture into new-lender territory, make sure to do your due diligence. Scour the fine print and talk to a representative. It helps too if they’ve been vetted and reviewed by knowledgeable sources (see their news/media page) and have well-known directors on their board and solid funding (see ‘about us’ page).

Have you used a ‘new’ lender? If not, would you? Or do you have a ‘new’ lender horror-story that we can dig into here? Write me!

I agree that the lending entity that can provide the borrower with a secure on-line application and rapid approval and the capability to allow the borrower to close the loan electronically will continue to gain marketshare and will ultimately represent the new standard in lending. There are generations of consumers that will never use a brick and mortar bank branch and will look to do all of their banking and investing on-line. --Chris, PA

Posted on: 20 Jun 2008 12:40 P.M.

For any borrowing - you're talking about the simplest, most pure form of commodity-like transaction. I tell anybody who asks me the same thing - when it comes to borrowing money - who cares who the lender is - if they get you the money at the lowest cost to you - so be it - you're talking about money - as long as they are legitimate and can get you the money - why on earth would you want to pay a penny more than you needed to for that same service elsewhere? --Ethan, NY

Posted on: 20 Jun 2008 12:18 P.M.