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Online Lenders: The Millennials Choice

online lenders millennialsApplying for and taking out some kind of loan is often part of growing up and becoming an adult. Whether a person wants a car or a new home, to start a business, or they just need to consolidate debt, loans can be a part of life for many. For part of the last century, needing to apply and take out a loan means seeing if you can qualify. However, as millennials begin to make up more of the adult consumer class, an undeniable trend has revealed itself. Millennials (age range – 23 through 38 as of 2019) are much more likely to choose to borrow from online lenders.

The clearest reason for this change is because of millennial comfort on the internet. Older generations may not trust offering the information necessary to take out an online loan. Millennials basically grew up online while previous generations can remember a time where the internet was not nearly as pervasive.

Related: Higher Education Without Student Loans? Top 10 Tips Right Here!

Online Lenders: The Millennial’s Choice

Millennials know where to find reputable and responsible loan brands on the internet. Perhaps that shouldn’t come as much of a surprise to you. But, what may be quite surprising are the reasons behind the continuing online loan trend. Keep reading to find out why the millennial generation is opting for online lenders rather than traditional banks loans.

Credit Score

This may the most straightforward and obvious reason why millennials are seeking out online lenders. In order to qualify for a traditional bank loan, applicants must enjoy a very high credit score. If you want to take out a personal loan without a credit score of at least 700, you could either:

  • face incredibly high annual percentage rates and interest rates, or
  • just get flat-out denied.

Getting denied is quite the hassle when it comes to traditional bank loans. The application and approval process itself take time. Not to mention the credit pull that banks initiate in order to learn about your borrowing history can actually further reduce your credit score going forward. It’s not fair, but it’s definitely the norm.

For millennials, a good credit score can be rather hard to come by. The high need for student loans by millennials has put millions of them in debt in their young adulthood. This is done before they have any income or even really know how loans and debt work. In fact, as of last year the amount of student debt in the United States was valued at approximate $1.5 trillion. It’s labeled a full-on financial crisis for young adults in America and shows no signs of slowing down anytime soon.

Your Credit Score and Online Loans

So, what do online lenders offer when it comes to the issues created by less-than-ideal credit scores? It’s pretty simple actually.

  • Online lenders can typically offer loans to people with less than perfect credit scores.
  • Online lenders are not beholden to those same industry standards as traditional banking institutions.
  • Unlike banks, online lenders can make up their own qualifications for who can get approved and who cannot. 

If your credit score isn’t good enough to secure a traditional-style online loan, there are peer-to-peer loans. This means that you will be getting your money from a number of lenders. It mitigates the risk on their end and makes it more likely for you to receive a loan regardless of your credit score.

manage your home financesSpeed

Another reason why millennials are turning towards online lenders is because of the speed and efficiency in which online lenders can get money to borrowers. Traditional loans can take days or even weeks for applicants to find out whether or not they have been approved. After that, there can be even more waiting before the money they have borrowed is even in their account.

Millennials are often maligned for their need of instant gratification. But, when it comes to getting money you need, instant support and relief is definitely the way to go. If you have bills to pay or need to make a quick investment to improve your business or stock portfolio, fast money from an online loan could be exactly what you need.

Online lenders have far less self-imposed loops that they need to jump through in order to approve and initiate a personal loan compared to traditional bank loans. Therefore, online lenders can get your money to you in a matter of days or even hours. It’s a great thing to keep in mind if you are in need of fast cash.

Interest Rates and Fees

 The previous two reasons can prove that millennials are borrowing from online lenders more than generations prior to them. However, this last point makes the case why all borrowers should seriously consider seeking out online lenders for a personal loan before heading to their nearby bank. Online lenders do not have to pay for upkeep of their store-front locations (because they don’t have any), so they can offer much lower costs when it comes to loan fees and interest rates.

Essentially, this means that you could be paying entire percentage points less to take out your loan, making your online loan less expensive. Depending on the size of your loan and the length of your payment term, this can save you hundreds. A lower interest loan should be all the reason you need to understand why millennials are considering online lenders.


While there is always a benefit that comes with borrowing from a well-known establishment, such as a bank, that doesn’t mean it is the best option for you. While borrowing from an online lender does require a bit of extra preliminary research it can prove more than worth it and can save time and money. So, whether you are a millennial, or a parent of millennials, it might be time to consider following in their tracks the next time you need to take out a loan.

Have you ever borrowed from online lenders? What was your experience like?


AUTHOR LaTia Longuemire

My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.


  1. How can I become an online lender? I’d love to make a little bit of my money work for me, passively.
    Thanks for the great article, as always, keep up the good work!

    • Hi Tim – here’s a good article on the best peer-to-peer lending sites. . I personally have never invested this way, but I’ve heard overall success with this approach. It’s not going to make you rich, and at times isn’t passive (when you suddenly have someone that’s not paying), but it’s certainly better than making $0 in a savings account! Best of luck!

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