Unfortunately, this trend has also attracted significant scrutiny from both regulators and consumer advocates, who worry that these lenders are charging higher rates than traditional banks and engaging in predatory practices. In response to this criticism, a group of online lenders have come together to defend their industry and provide evidence that digital lenders are delivering safe and competitive consumer loans.
The Online Lenders Alliance (OLA) is a trade association comprised of a consortium of both large and small online lenders, founded to “promote best practices and ensure a fair and competitive marketplace” in the industry. To combat the rhetoric that has been put forth by regulators and consumer advocates, OLA publishes quarterly reports on the performance of its members, as well as comprehensive industry research. Their data shows that online lenders are providing legitimate loans to borrowers, with safe terms and conditions that are competitive with traditional banking products.
In its most recent report, OLA found that, despite the perception that online lenders are more expensive, their loan products are actually often far less expensive than products offered by traditional banks. The report showed that borrowers using online lenders saved an average of 57% on fees compared to those using brick-and-mortar lenders. Furthermore, online lenders offer more flexible repayment options, allowing borrowers to choose the payment plan and APR that works best for them. Additionally, the report indicated that online lenders are typically serving customers with greater financial need or less access to traditional credit products, such as those with lower credit scores.
In addition to its quarterly reports, OLA also works to educate the public about its members' practices and policies. OLA maintains a website with detailed information about the process of applying for a loan, the rights of borrowers, and how lenders protect customers’ privacy. The organization also organizes educational events and provides webinars to give the public a better understanding of the online lending industry.
Overall, the Online Lenders Alliance has provided a strong voice for the online lending industry, countering the negative rhetoric with facts and data. Through its quarterly reports, comprehensive industry research, and public outreach efforts, OLA is making sure that consumers understand the value that digital lenders can bring to the marketplace. By presenting evidence that online lenders are offering safe, competitive loans to non-traditional borrowers, OLA is helping to create an environment in which digital lenders can flourish.
This article was contributed on Nov 21, 2023