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Press Jul 23, 2019

The evolution of short-term loans, from brick-and-mortar stores to modern online lending

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The evolution of short-term loans, from brick-and-mortar stores to modern online lending

When people need some quick cash to make ends meet or pay for unexpected bills, they often turn to short-term loans. These do not require collateral and are fairly easy to obtain. Short term loans have been around for more than a century, but the last few years have seen a dramatic shift from traditional loan stores to online lenders. This evolution mirrors that of other fields that have moved to an online environment in the past decade. The ease of a digital setting appeals to consumers, offering greater choice, flexibility, speed, and convenience in personal lending.

A brief history of short-term loan stores

In the early 1900s, consumer credit did not exist in the way it does today. When people needed a quick, short term loan, they had no lawful options. Many illegitimate, disreputable places to obtain a loan with extortionate interest rates and unethical practices were opened. Borrowers who defaulted on their loans would be publicly ridiculed, exposed to their employers, and even blackmailed.

Over the subsequent decades, both in Canada and the U.S., new regulations were slowly put in place to better regulate the short-term lending market. As consumers gained access to credit cards, mortgages, and other now familiar forms of credit, short-term lending somewhat conformed to this system. It became far more genuine and respectable. In 2006, Parliament established that provinces regulate lenders going forward. This led to consistent growth in brick-and-mortar lending stores in many provinces.

How online lending is changing the industry

The ensuing regulation of the industry at the provincial level, technological innovation, and an emphasis on service has led to the reinvention of online lending. Today, the industry has made lending more convenient, flexible, faster, and more reputable than ever before. Ultimately, online lending leverages technology to service more borrowers and allow them to take out loans without ever having to visit a store. It’s convenient and prioritizes the evolving demands of the customer.

According to a national survey made by the Financial Consumer Agency of Canada, fifteen per cent of payday loan borrowers said they did not have time to get a loan from a bank or credit union. Ninety per cent of borrowers said online lending was the fastest or most convenient option for their lifestyle.

In many ways, the rise of online lending — and the resulting decline in traditional stores — draws similarities to the rise of e-commerce. As the market share has grown for online retailers, traditional vendors have seen their business decline. Customers can get better prices, greater convenience, and better service when they shop online. The same holds true for online lending.

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The benefits of online short-term loans

There are numerous benefits for consumers using online lenders compared to conventional loan stores:

• Online application and instant approval;
• Funds received in two minutes by e-transfer;
• Paper-free: no faxing or mailing of documentation;
• Service available 24/7 including weekends and holidays;
• Improved privacy and safety compared to a loan store.

Trade-offs and drawbacks of online loans

There are naturally a few drawbacks to obtaining short-term loans online. For most people, these are minor considerations, and the benefits far outweigh the disadvantages. Some find they have less of a human connection in the online lending process, as communication is usually handled by email rather than in person. Nevertheless, help and customer service are available by phone whenever the consumer requires it.

Where to obtain online short-term loans in Canada

Canadians looking to take out an online loan can do so quickly and easily with iCASH. Currently leading the online lending industry, iCASH offers loans to Canadians in multiple provinces.

In as little as five minutes, customers can borrow up to $1,500 from the comfort of their home, office, or even on the go with the accessible iOS or Android mobile application.

In short, iCASH is writing the next chapter in the history of online lending. This product has been designed for the way people live their lives today — digital, always on, always available, and focused on service and convenience for the customer. Learn more about iCASH and how it’s helping Canadians on the path to a better financial future at www.iCASH.ca.

Alex Charbonneau

Alex Charbonneau hands-on approach to financial planning, investments, and leadership won him the respect of many. Alex is a trustworthy individual & someone that many in Canada aspire to work with.