Have You Ever Been Turned Down for a Bank Loan?
Getting turned down for a bank loan can be disappointing and even embarrassing. But thanks to peer-to-peer lending, your prayers might be answered. Peer-to-peer lending is one of the newest methods of obtaining a personal or small business loan.
How Does Peer-to-Peer Lending Work?
Unlike traditional loans, peer-to-peer lending also known as P2P lending allows both borrowers and lenders to connect without a financial institution. Peer-to-peer loans are funded by individual investors who are willing to finance your debt. These loans can be used to consolidate credit card debt, pay off medical bills, tax debt, finance automobiles, handle emergencies, start new businesses and more.
Peer-to-Peer Loan Companies
Two of the main companies that offer peer-to-peer lending are Prosper and the Lending Club. Their loan amounts range from as little as $1,000 up to $40,000. Repayment terms are usually between one to five years. Both companies have been in existence for over 10 years and operate pretty much under the same premise, but keep in mind everyone’s needs differ so you may want to compare services.
I’ve tried the Lending Club with great success and no complaints. Their online application is relatively simple. It usually only takes a few minutes to complete the process. Once they’ve notified you of approval, funding takes a few days.
How Do Peer-to-Peer Lenders Make Money
So how do they make money? P2P lenders charge origination fees to borrowers and deduct fees from the loan repayments made to investors. Nevertheless, as borrower with peer-to-peer lending you may stand a better chance of getting a “yes”for a loan.
Advantages of Peer-to Peer Loans
- Applying is easier and faster
- Criteria for eligibility is lower, first-time borrowers are OK
- You may be approved even if your credit score is low
- Fast funding directly to your bank account
- Low fixed interest rates
- No hidden fees or charges
- No penalty for early prepayment
- Convenient, automated fixed monthly repayment
Applying and checking your rate for a peer-to-peer loan will not affect your credit score. The process takes place entirely online, so be prepared to provide your identification documents digitally if required. Approvals usually take no longer than 72 hours.