|
Online lending: It covers more than credit cards
While virtual banks try
mightily to attract customers looking for low-cost checking
accounts.
other online companies concentrate on lending money. They figure
that doing business online saves money, so they can lend at
attractive terms.The pioneer in this business is NextCard, which
started taking credit applications online in 1997. NextCard promises
instant approval and allows consumers to customize cards. For
example, they can get a card with a low introductory rate that jumps
higher after a few months, or get a card with an interest rate in
the middle that doesn't change. One of the more successful virtual
banks, Juniper Bank, offers checking accounts, but its primary
marketing focus is credit cards. Juniper carpet-bombed America in
autumn 2000 with direct mail offers for its cool-looking,
translucent credit cards. Six months later, Juniper had 140,000
accounts. Most were credit cards, a spokesman says, but the bank
expects some of its credit card customers to open other types of
accounts as they get more comfortable with the service.
Credit cards aren't the only game in town. Some lenders offer
instant lines of credit with online retailers, and other lenders
offer mortgages and car loans.
NextCard and a competitor, eCredit, provide access to instant credit
for customers of online retailers that sell big-ticket items such as
computers, jewelry, furniture and art. NextCard will extend credit
to online customers of Diamond.com and Etronics, for example, while
eCredit finds lenders who will extend a line of credit to online
retailers including Gateway and Hearts on Fire, a jeweler.
Several companies are in the online mortgage business. Among the
most prominent mortgage lenders are E-Loan, E-Trade Mortgage and
Mortgagebot.com. IndyMac Bank Home Lending is highly regarded but
perhaps less known.
E-Loan is the most prominent online provider of vehicle financing.
Another well-known company, Lending Tree doesn't lend money directly
but acts as a broker, helping consumers find mortgages, auto loans
and other types of credit.
Thriftiness
Credit cards, auto loans and mortgages are much more complicated
than checking accounts. Sometimes online lenders offer the best
deals and sometimes they don't. It really depends upon your needs.
Perhaps an online mortgage lender offers a loan with lower fees but
slightly higher interest than your bank. Depending on how long you
want to live in the house, either loan could be a better deal.
It definitely pays to shop online. E-Loan's president says 10 to 15
percent of mortgage shoppers in America visit his company's site,
but most of them log off the Internet and ask local lenders to match
loan terms they found online. That can be a pretty effective gambit.
E-Loan's president would prefer that more of those shoppers stay
online and get loans with his company.
Convenience
Consider NextCard's application form. It's short, and the company
promises that it will decide within 30 seconds whether to give you a
card. Almost anywhere you apply online for a credit card or an
instant line of credit, you can expect to get an answer within five
minutes.
Mortgages are more complicated. When you apply online for a
mortgage, you still have to complete a pile of paperwork that
arrives in the mail a few days after you fill out the online
application. While online mortgages are avaliable, most people only
use them for comparison shopping.
Safety, security and privacy
There always are security risks with entering personal information
on Web sites. The transmittal of your information is pretty secure
if you can see an icon of a locked padlock at the bottom of your
browser window. That symbol means that the data in the forms you're
filling out will be encrypted when it is sent.
As far as privacy goes: When you apply for a loan, you always open
yourself to an invasion of your privacy, whether or not you apply
online. Expect to give out your Social Security number and for the
prospective lender to look at your credit score.
Source:
NEWS.YAHOO
|
