Peer to Peer Lending Companies and Loans.
Another way for families to borrow money is from P2P lenders which are formally known as Peer to Peer companies. There are several companies that provide unsecured loans to qualified borrowers, and they include LendingClub, Prosper, and UpStart among others. The cash can be used for anything the borrower wants, ranging from helping to pay for rent to a vacation, buying a new car, or buying Christmas toys. The bottom line is P2P loans can be used for anything a family needs or wants. Find more details on various P2P companies below as well as contact information.
What is Peer to Peer Lending?
It is a service in which people can lend money to other people over the Internet. Borrowers can get the cash they need as well, usually at lower interest rates than standard bank loans and definitely lower than payday lenders. The largest companies, including LendingClub, are made up of hundreds of thousands of people who are willing to lend money to others.
While there are a few different companies that offer the service, social network lending does come in many forms. In general it is when people provide money to others, without using a “middle” man such as a bank or some other financial institution. That person who loans the money is really the “lender”, not the P2P company itself. Most of the lending that occurs over a peer to peer network will be in the form of an unsecured loan, and the money can help pay for any expense the borrower may have.
What type of interest rate can I expect?
The exact rate is impossible to predict until you use the service, as it depends on the amount of money you need, the reason for the loan, your credit score and other factors. However, since there are no expensive banks or other financial institutions involved in the process, in general borrowers have the chance to receive interest rates on their loans that are more favorable than they might otherwise get from traditional lending institutions.
In addition, there are less restrictions, in that the money can be used to pay for debts, medical needs, housing costs, or whatever. But when borrowing money from a peer to peer lender, always consider what interest rate the funds are offered at as well as any additional fees to borrow the cash. So P2P is a form of assistance to anyone who needs cash for paying their bills.
Using a P2P network such as Lending Club to pay bills or living expenses is almost always better than payday loan providers, banks, or credit card companies. Basically companies that offer this service replace the complexity and high cost of bank lending by offering a more efficient as well as lower cost way to borrow money.
Lenders can also potentially make more money than they normally would by keeping their funds in a traditional investment such as a bank account as well. So this type of transaction benefits both the borrower and lender as by issuing a peer to peer loan they will receive higher rates of interest directly from the borrowers that they choose themselves.
What can I get a peer to peer loan for?
You can receive a loan for many reasons, including to help start a business, pay down debt, pay off a higher interest loan, buy a car, or almost any reason. Some households even use the funds for paying everyday bills, ranging from rent to a mortgage or for buying food or gifts for their kids. Some of the primary reasons for a loan include small business, home improvement, bridge loans, and debt reduction. Find how to use a peer to peer loan to consolidate credit card debt.
Why peer to peer lending works?
There are a few key reasons. One is that lending or borrowing money through a peer to peer lending or social network is significantly easier than working with a typical financial institution, such as a bank. You just need to sign up for an account with one of the the many available sites. The largest providers include Lending Club as well as Upstart and Prosper. The next step is to create a listing for your loan, and monitor the application progress.
Another one of the primary benefits of peer to peer lending is that your desired interest rate can be even lower that other loan types because of the unique model of peer lending. Lenders, who are competing for your business, can result in an even lower interest rate than you had expected or targeted as they are technically competing to offer you money. Of course, not all applications will have multiple parties bidding on the loan, so those may not offer the lowest interest rate.
How does peer lending work on a P2P site?
Typically, they works as follows. Anyone who is looking for some type of loan posts a listing on a social network or peer to peer lending site with the amount they need to borrow at an interest rate that they can afford to pay. they also usually list what the money is needed for, whether it is to pay down debt, cover a trip, pay for car repairs or rent, or something else.
Lenders, who are for the most part regular people (your “peers”) will bid on the listings by noting the amount they are willing to give. They will also note the interest rate that they are willing to lend the money to the borrower at. It is a form of bidding.
When the listing is complete, the qualified bids are then combined into a single loan for the borrower by the P2P company. Every month the borrower needs to pay the monthly interest amount that is due to the lenders until the loan is repaid in full.
An example of a peer to peer lending service is LendingClub. It is a social lending network in which members lend and borrow money from others at lower interest rates, therefore bypassing expensive banks. They are largest company in the industry. Another example of a peer to peer lender is Prosper. This site will offer loans up to $25,000. Both companies allow people to sign up in minutes, and potential borrowers can apply for a loan and get an instant interest rate quote on their application.