Please see information on Peer To Peer Lending Loans below.


Peer To Peer Lending Loans

What is a peer to peer loan?

Peer-to-peer loans, also known as marketplace loans, can be used by a borrower for any purpose, much like an unsecured, personal loan. Unlike a personal loan however, a peer-to-peer loan is provided by an individual or investor not a bank or building society. Online marketplace lending websites act like online, financial matchmakers who connect borrowers with individuals who are looking to lend their money to get a good return on their investment. The great thing about peer-to-peer loans, they usually have a low interest rate and flexible repayment terms with the ability to pay off a loan early with no fees applied.

How can I apply for a peer-to-peer loan?

You can apply for a peer-to-peer loan directly online, in fact this is the only way you are able to apply for a peer-to-peer loan as they do not have branches or offices. They do however; still boast fantastic customer services via email communication, online chat and via the telephone.

To obtain approval on a peer-to-peer loan you usually need:

  • To be a US citizen or resident.
  • Have a valid account with a US bank.
  • Have a minimum credit history of 12 months.
  • You will also need to verify your identity.

What are the advantages of a p2p loan?

As discussed, the main advantage of a peer-to-peer loan is the competitive interest rates which can be achieved. The uniqueness of peer-to-peer lenders is that they work solely online and are able to cut out the middle man, such as banks and building societies; therefore they have the ability to pass on the savings to the borrower. Lenders are happy to offer a lower APR to the borrowers, due to the fact they will already be receiving a higher return on their investment than if they put their funds in a traditional savings account. Peer-to-peer lenders have lower operating costs, because they do not have the overheads of branches, meaning they can offer more competitive terms to borrowers than traditional banks or building societies.

Peer-to-peer lenders also offer more flexible repayment terms, of particular importance is the option and ability to repay the loan early at no extra cost to you the borrower. This is something to bear in mind if you think your individual circumstances might change and you are able to pay off your debt early, therefore avoiding paying the interest rates over the duration of the loan.

What should I be aware of if I apply for a peer-to-peer loan? Are there extra risks to a traditional loan?

You can rest assured that there are absolutely no extra risks with a peer-to peer loan from a traditional bank or building society loan. Having said this, it is always important to ensure you check the terms and conditions of the individual loan agreement before you commit yourself. As with all loans if you default on payment then your credit history will be affected and you could face serious consequences. One thing is for certain, you will find it hard to obtain approval on any loan, credit card, phone contract, mortgage or borrow any funds in the future.

I am concerned that peer-to-peer lenders can request early repayment on my loan?

There is no chance that a lender can request early repayment on your loan or insist that a loan be recalled early. Online marketplace lending websites ensure that the peer-to-peer loans are at a fixed rate meaning you pay equal monthly repayments which will not go up or down and are not able to be recalled early by the lender. Lenders usually offer terms up to 5 years for the loans on offer. Please note however, borrowers are able to repay their loan early if they wish.

How do I know the interest rate of the peer-to-peer loan on offer to me?

The APR which is offered to you is based on a variety of factors and will vary between each individual borrower and individual lender. But how can you, as a borrower, affect the APR on offer? The main factors which affect your interest rates are your credit history and your individual profile how much you earn, your level of debt, access to credit and your individual circumstances. So, even if you have a less than perfect credit score you could still find a lender who is willing to lend you money. Just watch out for the interest rates and repayment terms!


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