Online lenders now penalize borrowers who shop around for better terms

Online loan marketplaces make it easier to find loans, but lenders are starting to punish people who apply to multiple places. This means borrowers might get worse deals if they try to compare offers.

For years, the promise of fintech was that technology would make borrowing cheaper and easier by reducing search costs. This paper shows that lenders are adapting. They are using repeated applications as a signal of credit risk, effectively making borrowers pay more if they shop around. This creates a new trade-off: the ease of finding offers versus the cost of being seen as a risky borrower.