Guarantor loans were initially offered by banks a few decades ago however it wasn’t until around 2005 that they were introduced to the subprime loan market.
When they were first introduced the process was largely paper based and while this worked, it was time consuming from an applicants point of view. As the guarantor loan market continued to develop lenders were searching for ways in which they could improve their ‘customer’s journey’; and it was hard to ignore the internet.
The vast majority of guarantor loan companies (whether they are brokers or lenders); will have websites where prospective applicants or guarantors can find information on the company and their loan product.
Traditionally, applicants would enter some basic details in a short online application form; the lender would then send out a full application form by post. Having completed the full application form then next step is to post it back, attaching any supporting documentation that may be required. If an application was successful the quickest the loan could be available to the borrower would be around 5 days from the day they applied; for many, this simply wasn’t quick enough.
This left providers seeking ways in which they could speed up the application process and potentially offer same day guarantor loans. They figured that the most effective way of doing this would be to offer a 100% online application process, where the applicant and guarantor would be able to complete the full application on the lenders website and e-sign their relevant agreements.
So gradually lenders began to offer online guarantor loans, which have benefited customers in a numerous ways:
Application Speed: Completing the paper-based application form in itself was not that time consuming; it was the sending and receiving that took the time. The online process means that as soon as the applicant and guarantor have completed the application; lenders can start processing the application immediately.
Documentation submission: Not all lenders will require any supporting documents however some will require things like proof of ID, address and income. Traditionally, applicants could either post or fax their documents. Nowadays you can take a photo of the documents using a camera or smart phone and upload it, email it or picture message it. This is not only quicker but it means that an application is no longer reliant on the speed of the postal service.
Payout Speed: Having received the application and relevant additional documentation lenders will endeavour to get the ball rolling almost immediately. If the application is successful then the money could be available the same day.
When you look behind the scenes there are a number of other aspects of a loan application that have been revolutionised by the internet. One that springs to mind is credit reference agencies (CRA); these are the companies that hold information about the credit history of individuals.
When a lender is processing a loan application they will consult a credit reference agency (CRA) in order to gain the credit file of the individual. Thanks to the internet this can be done at the click of a button. If you are curious about your credit file, CRAs such as Experian, Equifax or CallCredit often run 30 day free trials which allow you to view your file in the same way lenders would.
There is no doubt that the internet has revolutionised the guarantor loan market in numerous ways, and with lenders constantly searching for new ways to improve their process, the internet is only going to continue to influence the way in which guarantor loan providers work.