Saved & Saving: What is Peer-to-Peer Lending?

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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

Application Process

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.

 

 

 

 

 

 

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Saved & Saving: Top 5 Tips For Eliminating Debt With Your Tax Refund

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If you are among the nearly 80% of Americans expecting a tax refund, perhaps you may also be wondering how this money can be used to help clear up some debts. Perhaps you own a house or a car? Or maybe you have other reoccurring bills like credit card payments or student loans.

Proverbs 21:5 – Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty

  1. Figure Out Your Debt: Finding out where you stand can be scary, but not knowing can actually be quite costly. Even if your tax refund cannot cover everything, you might be surprised at how much you’ll save in the long run with just one lump sum payment. Use a debt calculator to see how much you can expect to pay over time based on your interest rate with just minimum payments. Then play with the numbers to see exactly how much you can potentially save if you pay just a little more each month.
  2. Create an Action Plan:  First step here will be to sort your bills and organize them by priority. Decide which bills you might be able to pay right away and which bills might benefit you if you pay them off early. Those benefits can either be savings or outright ownership. For example, if you pay off your car note, then the car will be yours. If you pay down the balance on a high interest credit card you will save a substantial amount of money. By using your tax refund to eliminate these debts, you will not only save money but you’ll now have an opportunity to jump-start your future goals of living debt AND stress-free!
  3. Eliminate Costly Debts First:
  • Credit Cards: So why does it make sense to use your tax refund to pay off credit cards? Simple, its in your best INTEREST! The higher the interest rates, the more you’ll pay over time on your purchases, especially if you are only making minimum payments each month. So that means, that the cute Sunday dress or really nice dress shirt you bought on sale for $40 might wind up costing you as much as $150 over time. If cutting your credit balances is your goal this tax season, find out how much you owe each of your creditors. Contact them directly and find out if they can offer you a lower interest rate. This has worked for me in the past. Should you decide to use your tax refund to cover the cost, don’t be tempted to overspend again. As Jesus said “Go and sin no more!”
  • Student Loans:  According to 2018 statistics from Make Lemonade,  there are more than 44 million U.S. borrowers with $1.4 trillion in student loan debt. Combine this with rent, utilities and other living expenses and you may have a recipe for what seems like a never ending debt cycle. Try and get ahead of this and contact your lender to find out if there are any prepayment penalties associated with your loan. If you are able to apply your tax refund as a lump sum payment, not only will you save on interest in the long run but you’ll shorten the length of the loan commitment as well.
  • Mortgage: Using your tax refund to pay down on your mortgage makes sense only if you are able to apply the payment to the principal portion of the loan. Make sure that you let your lender know in advance how to apply your payment, otherwise they may automatically apply it to unpaid interest on the loan. By paying down on your home you’ll not only save a tremendous amount of money in interest charges but you’ll also be able to build equity and own your home sooner.
  • Medical Bills: Health challenges can be sudden and unexpected. Even with insurance coverage, many individuals sometimes find that it may not always fully cover the cost of a hospital stay.  If you receive a bill don’t ignore it. Most people don’t realize that medical debts can appear on your credit report and lower your score as much as 100 points. If you are unable to pay because of financial hardship, be proactive and contact your hospital’s finance division to review your options.  If you are able to cover the bills with your tax refund, then pay it off and consider it one less debt in your name.

4. Create an Emergency Fund: If nothing else, 2017 taught us that disasters can happen. Hurricanes, mudslides, tornadoes, floods and fierce volcanic-like wildfires all dominated last year’s news and this year is gearing up for a possible repeat. Disasters that fall under “Acts of God” are rarely ever covered by home insurers. When such disasters occur, there’s usually little if any time at all to prepare.  Depending on the magnitude of the disaster, survivors generally are blessed just to be able to leave their homes with the clothes on their backs. Nevertheless, an emergency fund can provide much-needed temporary help during these times.  But also keep in mind, natural disasters are not the only unforeseeable life events. Sudden illness, job loss or even divorce can also hinder your ability to pay bills. Typically, three to six months of reserved cash can cushion you and cover basic living expenses until you get back on your feet. Deposit your tax refund to help you advance this goal. Use automated banking if necessary to make prescheduled deposits into a separate account. It’s the easiest way to save. Just set it and forget it!

5. Check Your Money Habits: For some, this might be the hardest part of the process. Being honest with yourself and examining the real reasons why you got into debt in the first place. Whether it was because of impulse shopping or perhaps due to something completely outside of your control. The reality is, that while we may forgive our debtors, debtors rarely ever forgive in return. They just want what you owe. While the road to becoming debt-free might seem like a long haul, rest assured the journey is not without reward.  Learn  how to be a responsible steward over your resources with Author Dave Ramsey’s “The Total Money Makeover: A Proven Plan for Financial Fitness” It is an excellent resource, complete with step-by-step instructions on how to get your financial house in order using Christian principles.

More “Saved & Savings” Tips Coming Soon!