Why is an online loan cheaper than signing a contract in the branch?


Taking out a loan via the Internet has long been part of everyday life. This form of contracting offers many advantages, both for the borrower and the lender. The processing is done faster, can be done conveniently at any time of the day from the home computer and the comparison of different loan offers is greatly facilitated.

Another, frequently mentioned advantage also includes the fact that the terms of an online loan can be much more favorable for the borrower than would be the case with a loan through a bank branch. But why is that actually?

Saved costs are passed on to the customer

Saved costs are passed on to the customer

With an online loan, the lender does not have to do any of the steps that would otherwise have to be done by his staff. The borrower fills out all of his forms online himself. In many cases, advice is not necessary. If at all, the borrower answers only a few important questions by email or phone. Since many documents are filled in on the PC and submitted digitally, the laborious reading of the original papers into the provider’s database is also made easier.

All of this means that processing can be carried out with a minimum of personnel – the company has to cover lower costs than if a contract was signed in the branch. A direct bank can offer particularly low interest rates because it also saves the high operating costs for the branches. Branch banks also have better conditions in their online offer.

Since the borrower takes over many processing steps himself and does not provide on-site advice, the staff is relieved and meanwhile carries out other tasks. Since the lender takes less effort and costs to grant a loan, he can pass these savings on to the customer.

Time saving

Time saving

Time is money – this also applies to the granting of loans. Applying for an online loan is not only quick for the recipient but also for the lender. While the daily working hours of employees in a branch are limited and appointments have to be negotiated, theoretically several thousand people can apply for a loan online at the same institute every day.

Missing data is also no longer necessary, since many forms can only be sent if they have been filled in correctly and without gaps. This is a huge advantage for the lender. His employees can immediately work with the complete documents and save valuable consultation time. In particular, looking after customers whose loan applications are ultimately rejected takes a lot of time without making money for the company.

Not only the customer benefits from the quick conclusion of contracts, but also the company. The faster the money flows and the less time it takes to invest in each contract, the higher the profit for the lender. This is also one of the reasons why direct banks can offer the cheapest loans.

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