Peer To Peer Lending Loans - Market Place Loans

Peer To Peer Lending Loans or Market Place Loans, are effectively unsecured personal loans with competitive interest rates and flexible repayment terms. Online financial matchmaking websites match borrowers with individual lenders or investors who are willing to lend their money, whilst looking for a good return on their investment. As a lender you could get a higher return on your investment than you would otherwise receive in a traditional savings account, as a borrower you could receive low interest rates and flexible repayment terms. To borrow a peer-to-peer loan you could be either an individual or business, but as a general rule to take out a peer-to-peer loan you need to be over 18 years old, have a good credit history, income and borrowing history. These factors will all determine your APR and repayment terms, but even if you have a less than perfect credit score you could find a lender who is willing to lend to you.

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What is a marketplace loan or peer to peer lending loan?

Peer-to-peer loans, or marketplace loans, are a new way of borrowing money where one is able to cut out the middleman, banks and building societies, in order to receive favourable terms on a loan. Online financial matchmakers match borrowers with lenders so you do not have to borrow from a bank or building society. Instead of borrowing money from a financial institution, you borrow money from an investor or individual who is looking to invest their money. One of the main advantages of this way of borrowing is, as a borrower, you can receive much lower interest rates on the money you borrow. The p2p loan application and approval process is completed all online via a streamline process. By using technology, peer-to-peer lenders are able to keep interest rates lower and repayment terms flexible.

What are the advantages of a peer-to-peer loan?

With a p2p loan you can benefit from lower interest rates than you would normally receive via traditional banks or building societies. This is the main advantage of a peer-to-peer loan, but what else do they have to offer? Almost all peer-to-peer lenders also offer flexible loan repayment terms including no early repayment charges should you wish to pay your loan back early. This is a particular benefit because banks and building societies can charge early repayment fees which can often be pretty high. They offer a variety of repayment term options, ranging from 1 – 5 years, so you can decide what loan is most suited to you and your needs.

Why are interest rates so low with peer-to-peer loans?

There are two main reasons that peer-to-peer lenders are able to offer such competitive interest rates, the first is you get to cut out the middle man and borrow funds from investors or individuals who are looking to invest their money in an alternative to savings accounts. As a result, they are happy to accept lower APRs than the banks would charge as they are getting a better return on their investment. The second reason interest rates can be lower than a traditional loan is that social lending websites are all based online, allowing them to cut their overheads and keep their costs down. That is not to say they do not offer a quality customer service via the telephone, email or online chat.

What are the main risks of a p2p loan?

To a borrower, there are no extra risks associated with a p2p loan than a traditional loan. The main risk with a peer-to-peer loan actually applies to the lenders rather than the borrowers. As a borrower you can be sure and safe in the knowledge that your money cannot be recalled early and there are no extra risks to a usual bank loan. Having said this, there is always some risk associated with any loan which you should be aware of. You must always read the terms and conditions of any financial product before you commit yourself and if in any doubt seek financial advice. Any late or missed payments will be noted on your credit report and if you default on your repayments you will be treated the same way you would if you missed a payment with a traditional bank.

Are you sure a peer-to-peer loan will not affect my credit score?

If you make an online application for a quotation for a peer-to-peer loan, via an online marketplace lending website, you will have what is called a ‘soft search’ applied to your credit report. This will be visible to you and lenders; however, it will not affect your credit score. You can then decide whether you are happy with the APR and loan terms before a full credit search is undertaken on your credit report.

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