Romancing THE LOAN - Company Business and Marketing

Online lenders are making it easier to borrow money -- and they're putting consumers in charge of the process. Who's benefiting most?

WOMEN.

When Mary Gardemann, a homeowner is Huntington Beach, Calif., set out to refinance her mortgage last summer, she braced herself for the worst. A bad experience 10 years previously had left her wary. "I found it very intimidating," she says.

The loan agent she dealt with the first time around was aggressive and impatient. But this time Gardemann worked with online lender LendingTree, whose courteous and friendly staff made her feel "totally comfortable," she says. The company didn't care whether she knew her points from her PMI, and no one tried to take advantage of her lack of knowledge. "And there was a lot less hassle," she says. A lot less waiting, too. The deal closed in two weeks rather than two months, as it had the first time.

Most consumers rate shopping for financial products only slightly above getting a root canal. But for many, the Internet is making the process less dreadful. Women in particular are turning to the Web to do their homework before the negotiating begins. As borrowers, women historically have felt at a disadvantage when shopping for loans. Some have felt alienated by slick salesmen and sexist policies. But on the Web, they rally to such lender sites as MSN MoneyCentral, IndyMac Bank and Quicken Loans. The information gleaned there helps them figure out the right questions to ask lenders and gives them confidence in their ability to evaluate offers.

"Women don't want to be sold -- they want to be educated," says Sonny Spearman, VP of marketing at Quicken Loans, a division of Intuit that underwrites loans. Spearman says that more and more women are researching and applying for financing at QuickenLoans.com, which offers loan calculators, advice columns and comparative-rate data. And mortgage aggregation sites like E-Loan and LendingTree allow women to comparison shop.

The Internet is now officially coed -- a fact that has not escaped the financial services industry. Women currently account for 50 percent of Internet users, up from 38 percent only four years ago, according to a recent study by Jupiter Research and Media Metrix.

Perhaps out of fear of alienating potential male customers, most lending sites deny that they're making a direct pitch to women, but many are clearly incorporating design features and editorial content aimed at attracting women. IndyMac.com offered treatments at a Southern California day spa in a recent sweepstakes ("Some banks walk all over their customers. We offer ours full-body massages.") Countrywide.com's home page shows a smiling couple sitting together at the kitchen table and peering at a computer screen. At AOL, there's Jean Chatzky's "Ask The Expert" column, sections on single-parent financial planning and features on the financial impact of divorce. Darrell Delamaide, manager of AOL's Personal Finance channel, says that women, who account for slightly more than half of AOL's 24 million members, make up an unusually high percentage of the channel's users.

Suze Orman, author of The Nine Steps to Financial Freedom and a speaker on women and personal finance, says that the wooing has begun: "Women are being singled out [by Web businesses] because they know that we're controlling a lot of the money right now." Other financial experts agree. "More and more women are using the Net to shop from home for a more attractive mortgage," says Nick Karris, an analyst at Gomez Advisors.

The numbers bear this out. In a 2000 survey conducted by Bruskin Audits & Surveys and commissioned by Intuit, 60 percent of women respondents said there were advantages to using the Internet to find a home loan. Nearly one-quarter noted that they liked being able to research at their own pace. Eleven percent preferred not dealing with a loan officer in person. And 3 out of 5 expressed some fear or concern about applying for a loan. Luckily, shopping for a loan online means that many of the things that turn women off about the process are absent, or at least minimized.

LendingTree, an online mortgage aggregator that matches customers with lenders, tries to make applicants feel that they have some control over the lending process. Would-be borrowers fill out a form, which the company submits to multiple lenders. Mortgage brokers and banks then bid on the application, and the consumer usually receives several options, each from a different lender. "Lenders compete for your business, rather than the other way around," says Doug Lebda, president of LendingTree, which is based in Charlotte, N.C. Indeed, in one of its TV commercials, a woman turns down loan officers like Scarlett O'Hara rejecting courtiers. "Not good enough," she tells one. "Next!" she barks.

In an industry with a reputation for macho posturing and hard-sell tactics, women clearly prefer the relaxed atmosphere of online lending. Many are relieved at the prospect of no longer having to curry favor with a lender, often a man, who is bullying or patronizing, or who makes them feel like he's doing them a favor.

Ruth Tara, a designer of home gyms who lives in Westchester County, N.Y., raves about the many advantages of applying for a loan from home rather than face-to-face with a high-pressure loan agent, like the one she encountered a few months ago at a Toyota dealership. After checking out a few deals online, Tara saved 2 percentage points on a five-year new-car loan by financing her Celica through E-Loan. "Sure, the financing manager [at the dealership] was irritated," she says. But I asked him, "If I were your daughter, what would you do?' He just walked away."

All this comes as no surprise to Joseph Kennedy, VP of marketing at E-Loan. An 11-year veteran of Saturn, which pioneered the haggle-free sales approach that attracted female customers in record numbers, Kennedy has long believed that a nonconfrontational sales pitch appeals to women. "Getting a loan, like buying a car, is one of those big broken processes," he says. "The reason buying a car is a pain is because the person you re supposed to trust is incentivized to take you for a ride. The more you pay, the more he makes," Kennedy says.

Because online lenders have to compete with the entrenched loan industry, many emphasize customer service, which is often in short supply among established lenders. "The level of service is so low [in the traditional mortgage market]," says Gomez Advisors' Karris. "There's great opportunity online."

Lenders know that women have a special interest in saving time. Twelve percent of women respondents in the Bruskin-Intuit survey cited shorter waiting periods as a plus. Says Anya Sacharow, an analyst at Jupiter Research: "Women are interested in a more efficient experience -- getting online and getting off. Women are more pressed for time than men. They're often juggling kids, jobs and taking care of the house. Men, more often than not, are only responsible for themselves." Indeed, most of the sites promise and deliver fast turnarounds on loans. E-Loan, like other major consumer lending sites, approves some loans in a matter of minutes. And most of the top sites offer nearly instant pre-approval and online rate lock-in.

Regardless of the benefits of online loan shopping, borrowing large sums of money will never be an entirely painless experience. Still, anything that makes it less of an ordeal or chore is bound to keep women coming back. When they do, it'll be up to the lenders to measure up to their rising expectations. Next!

Laurie I. Flynn is a freelance writer and a frequent contributor to the New York Times.

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