Trouble Getting A Loan?
Whether it’s for a personal loan or a small business loan, these days people are heading to peer-to-peer lending in droves to obtain a loan instead of going to their local bank.
And it’s no wonder why:
* Better Approval Rates: No need to have exceptional credit score or ratings that traditional banks often require, i.e. Less than perfect credit or “Bad” credit OK. (details below)
* SPEED Of Approval – You don’t need to wait weeks or months to be approved (i.e. local bank). You’ll get a loan in a matter of days thru a P2P lender.
* Bigger Loan Amounts: Often significantly more than what your local bank will approve you for.
* Lower Interest Rates: Comparable to and sometimes significantly lower rates than what you’d find at your local bank.
* Zero Prepayment Penalties: erm…no contest here 😉
“Peer-to-Peer Lending is a new financial movement that promises to solve loan issues that banks cannot – or will not – handle.”
So What The Heck Is P2P Lending Anyway?
In a nutshell, P2P lending is an online platform that allows you to borrow from others instead of thru a bank. Pretty much anyone can become a lender as well and earn interest income thru this system. Sounds interesting but does it work? How about 4 Billion dollars in issued loans just in the past few years thru P2P lenders. The top P2P lender sites are funded not only by thousands of individual personal lenders, but wealthy financial institutions like Google, etc, have also stepped into the arena to back the biggest P2P players. Many say it’s the future of online banking, and so the Big Players (like Google) are jumping on this bandwagon.
So who’s taking advantage of P2P lending?
Heck, you name it. Practically anyone who wants some quick hassle-free financing:
1. Folks who want to consolidate their high interest rate credit card debt into a low interest rate personal loan.
2. Small business financing
3. Loan for home improvement
4. Other reasons include medical, weddings, auto, rv, etc.
5. Last but not least, as a safe investment (that’s if you’re interested in the lending side).
More details on why P2P lending/borrowing has exploded:
1. Less Than Perfect Credit or “Bad” Credit OK
Traditional banks aren’t lending money like they used to. The U.S. economy the past few years have been tight. You often need excellent 3 credit scores of 700+ to get approved for personal loans from a bank. But peer to peer lending sites use a slightly different credit check than the banks, using an evolving algorithm that’s based on consumer data to see what makes for a successfully issued loan. So it’s not just based on a credit score like with traditional banks. What’s more, they run a lean & efficient machine with much less overhead than a traditional bank. Much less. No expensive bank buildings with hundreds of employees to support. Everything is done online. Bottomline, it’s easier to get approved for a loan thru a P2P lending platform even with less than perfect credit.
2. Bigger Loan Amounts
This sort of ties in with reason #1. In today’s economy, people often discover they are able to obtain much larger loan amounts using a top P2P lending platform than they’re able to get from their local bank. (Try this comparison test: Just ask your bank what loan amount you’d be qualified for. Then try to see what you can get via a P2P lending platform. You’ll be amazed at the difference 😉 ). Right now the top P2P lending sites like Prosper.com or LendingClub offer loans up to $35,000. But you can start at $2000.
3. SPEED: Traditional banks often take weeks to process a loan request. With the peer to peer lending platform, you can often get approved for a loan in a matter of days. It’s that “lean & efficient machine” factor we talked about. Less paperwork and redtape.
4. Very Attractive Lower Interest Rate Loans
Another big reason why P2Plending has taken off like a rocket. And it’s one of the reasons why many are using it to consolidate their high interest credit card payments. They obtain a much lower interest rate personal loan via P2P lending. Most of these loans are monthly installment loans. 3yr or 5 yr term.
5. Zero Prepayment Penalties
Yup, zero, nada with P2P borrowing.
6. Wanna Invest? Enjoy Safe 9.09% Returns
If you’re ever interested in investing (lending) thru a P2P platform, it’s a great way to diversify your portfolio and enjoy safe and consistent returns.
What’s The Best P2P Lending Site That People Recommend?
Now you have some insight into why P2P lending/borrowing has taken off. Borrowers get access to low interest loans relatively easily and quickly. And lenders (investors) get solid and stable returns. The obvious next question would be, what’s the most popular and reliable P2P platform to use right now. Hands down, there’s really only 2 out there that I would recommend without any reservations – Prosper.com and LendingClub. They’re the two platforms that are backed by the Big Financial Players I mentioned earlier, with a solid track record, and the financial size & stability to boot. Pretty much most of that $4 billion in issued loans went thru these 2 P2P platforms.