New Lending Options in the Digital World

Property investment has been a reliable avenue for wealth growth for decades. However, traditionally, access to real estate loans was reserved for large investors or those with a strong financial position. Technology is changing this landscape and democratizing access to real estate loans. In this article, we will see how technology is making real estate loans more accessible and how this especially benefits small players in the investment world.

The Transformation of the Lending World

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Technology has triggered a real revolution in the real estate lending industry. In the past, small players, such as individual investors or small businesses, faced a number of limitations. Traditional financial institutions used to require a strong credit history, extensive assets and overwhelming red tape. These requirements excluded many from being able to obtain loans to purchase property.

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New Options in the Digital World

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Today, the picture is very different. Digital lending platforms have completely transformed the way in which loans are accessed. Small players can now explore a variety of options, these alternatives provide flexibility and opportunities that were previously unattainable.

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Currently, there are several digital lending platforms that offer options for small investors. One of them is Aave, a decentralized lending platform that uses blockchain technology to ensure the transparency and security of transactions. Aave allows borrowers to use their cryptocurrencies as collateral to obtain loans in fiat currency, providing flexibility and opportunities that were previously unattainable.

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Another digital lending option is Nexo, a platform that offers cryptocurrency-backed loans. Users can deposit their digital assets on the platform and obtain loans in cash or stablecoins.

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These platforms are just a few examples of how technology is transforming access to real estate loans for small players. With collateralized options and simplified processes, small investors have more opportunities than ever to participate in the world of property investment.

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Differences between Digital Loans and Traditional Loans

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Digital loans differ from traditional loans in several ways. First, the application processes are simpler and faster, since they are carried out online and eliminate much of the red tape associated with traditional loans. In addition, the requirements are more flexible, making them more accessible to people with limited credit history or low incomes. Borrowers can explore customized options based on their financial profile and needs, giving them more flexibility than traditional loans.

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Some of the features that stand out about this new digital tool are:

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• Accessibility: Digital loans are accessible to a wide range of borrowers, including those with limited credit history or without access to traditional loans. Digital lending platforms offer simplified application processes and more flexible requirements compared to traditional loans.
• Efficiency: Digital loans are characterized by their speed and efficiency. Borrowers can get loans online in a matter of minutes or hours, instead of having to wait days or weeks for a response.
• Customization: Borrowers can explore customized options based on their financial profile and needs. Digital lending platforms offer a variety of lending options, from personal loans to business loans, and borrowers can choose the one that best fits their needs.
• Collateralization: Some digital lending platforms offer collateralized options, meaning that borrowers can use assets as collateral to obtain loans.

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Surely you are at a point where you have more than 1 question, which is why to better understand these new concepts of loans today, we leave you the following list with some questions

• What are digital loans like? Digital loans are characterized by their online process, which streamlines the application, evaluation and approval of loans, eliminating much of the red tape.
• What types of loans currently exist? There are a variety of loans, from traditional mortgages to P2P loans, collateralized loans and microloans, each with its own characteristics and requirements.
• What are Collateralized Loans? Collateralized loans are backed by assets, such as property. The collateral acts as collateral for the lender.
• How Do Collateral Loans Work? Collateral loans allow borrowers to use their assets as collateral. If they default, the lender can take the collateral.
• What Risks Does a Collateral Loan Have? Risks include the loss of collateral in the event of default and the need to keep the asset in proper condition.

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Let's imagine that María, a small investor, owns valuable property. María wants to obtain a loan to finance an additional investment. Use your property as collateral to get an online collateralized loan with Reental. Thanks to collateralization, María obtains favorable interest rates and flexible terms. If you meet your payments, you keep your property and leverage the loan to grow your investments.

Collateralization: An Innovative Strategy

Collateralization is an innovative strategy that allows borrowers to use their properties as collateral to obtain loans. In the world of real estate lending, collateralization has revolutionized access to loans for small players, since previously only those with significant assets could access sizeable loans.

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In the digital context, collateralization provides additional benefits. In addition to facilitating access to loans, it can also lead to more favorable interest rates and flexible terms. Borrowers can use technology to manage their loans and assets more efficiently.

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Collateralized loans can also be an attractive option for those seeking financing for investment projects. For example, investors can use their properties as collateral to obtain loans that allow them to finance real estate or other projects. In general, collateralization is an innovative strategy that has democratized access to loans for small players and has provided additional benefits in the digital world, such as more favorable interest rates and flexible terms.

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P2P Loans and Microcredits

P2P (peer-to-peer) lending is a financing alternative that has gained popularity in recent years. Unlike traditional lending, where borrowers approach banks, P2P lending works through online platforms that connect borrowers to individual lenders. These platforms offer lower interest rates than traditional banking products, due to the competitive nature of the P2P market, where multiple lenders compete to offer the best rates to borrowers.

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An example of a platform that offers P2P lending is Nexo, which allows users to obtain cryptocurrency loans. The platform uses a variety of cryptocurrencies as collateral for loans, allowing users to obtain loans without having to sell their cryptocurrencies.

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On the other hand, microloans are loans of small amounts of money that are granted to people with low incomes or to small businesses that do not have access to traditional loans. These loans are used to finance small projects that can make a big difference in people's lives and business growth. Microloans are designed to provide access to finance to individuals and businesses that would otherwise be excluded from the traditional financial system. This includes low-income entrepreneurs and small entrepreneurs who need capital to boost their businesses.

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An example of a platform that offers microloans is Moni, an Argentinian company that offers online loans of up to $500,000. The platform offers fast, unsecured loans, with terms of up to 12 months.

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