Loan Lending App Development: Process & Tips

Denis Astapchenia

Denis Astapchenia

Director of Financial Technologies

Financial Services
Aug 3, 2022
10 minutes to read
views
  1. What exactly is a Loan Lending App?
  2. Advantages of loan lending apps to end users
  3. Disadvantages of loan lending apps to end users
  4. How do Loan Lending Apps work?
  5. Loan Lending App Development: pros & cons
  6. How to create a Loan Lending App: where to start?
  7. Discovery and planning
  8. Choose your tech stack and team
  9. Design and development
  10. MVP and testing
  11. Release
  12. Support and maintenance
  13. Loan Lending App Development peculiarities
  14. Set up your own company and secure investment
  15. Comply with the law
  16. Expert legal and financial help
  17. Wrapping up

The race to digitize everything is on. Most businesses, if not all, have to adapt and move operations online if they want to survive and thrive among the smartphone-obsessed population. And this doesn’t exclude mammoth institutions like banks, venture capitalist firms, loan companies, and the like. If anything, they are being outdone by new digital businesses which have sprung up because of the opportunity for online financial solutions. And they’re killing it!

FinTech is thriving and is predicted to reach over $31,503 billion in market value by 2026. With over $210 billion being invested in FinTech businesses worldwide in 2021 (Research done by KPMG), no wonder so many people are looking to take advantage of this by creating their own financial solutions.

Global FinTech Market

Alternative lending is the branch that is making noise, and it’s expected to reach around $400 billion by 2026. Apps that lend you money are the current trend of alternative lending.

And are we surprised? No, not really. Online lending platforms and apps offer people the opportunity of borrowing money without a lengthy, complicated process, without leaving the house, and at lower interest rates.

If you’re interested in loan app development, you’re in the right place. In this article, we will explain in detail what these solutions are, their pros and cons, and how to proceed if you’d like to have one developed for you.

What exactly is a Loan Lending App?

Money loaning apps are a form of P2P (Peer-to-Peer) lending, meaning an entity – investors, startups, small companies, venture capitalist firms, and so on – lending to a person – individuals, homeowners, students, business-starters, or just about anyone else who wishes to take out a loan. There are no banks involved or large loan companies, and everything is done online. There is no need for multiple trips to the bank, signing tons of paper contracts, or excruciatingly long financial examinations.

Advantages of loan lending apps to end users

They are accessible

Lending through an app is a lot easier for borrowers than a more traditional avenue like going through an intermediary. There is no need for long trips to the bank, and just about anyone can do it from the comfort of their own home. This also applies to investors, allowing them a fast and smooth investment process online.

No hassle processing

The best thing about money loaning apps is that people can borrow and invest money quickly, easily, and without going through an extended process. There’s no need for long background checks, signing a mountain of paperwork, or trying to convince lenders to accept your request. Instead, a borrower can just apply for a loan from an investor, go through the relevant background checks and receive the money straight into their account.

Lower interest rates

Most of the time, interest rates are lower than those from an intermediary. This is because of lower down payments, the platform's online nature, and competition between money loaning apps.

Flexible amounts and pay-back time

Borrowers can quickly negotiate the amount borrowed (up to a certain amount, of course) and the time it will take to pay the loan back in full. This gives borrowers more freedom to choose how much to pay back and over how long.

Disadvantages of loan lending apps to end users

Credit risk

Borrowers that turn to money loaning apps are usually people who aren’t able to apply for more conventional types of loans due to their low credit ratings. This is a risk for the lenders – there is always a chance the borrowers won’t pay them back.

No insurance or government protection

The government does not provide insurance or protection to the lenders in case of the borrower’s insolvency – so the risk is all the investors’.

Legislation

Some places do not allow lending through loaning apps or have extra rules and investment regulations in place. Therefore, peer-to-peer lending may not be available to everyone.

But for those who can, lending and borrowing via an app is faster and easier. And that’s not to mention that the market for digital lending is expected to reach $22.4 billion by 2028. With apps like Earnin, Brigit, Dave, and MoneyLion, in the lead, other companies, startups, and investors are following suit to enjoy a slice of a fast-growing market due to increasing demand.

Lending Market

How do Loan Lending Apps work?

The great thing about money loaning apps is that there are no banks or other intermediaries between the lender and the borrower. The app acts as the go-between for these two parties, keeping interest rates and other c