You’re not alone in this. Over 800,000 people filed for bankruptcy in 2015. While the total continues to decline, medical bills and utility bills continue to pose as looming threats to a person or business’ financial stability.
If getting a bank loan takes too long or the rates are too high, you should consider peer to peer money lending.
Defining Peer to Peer Money Lending
At its most primary level, peer to peer lending (P2P) is similar to giving a loan to a friend.
There’s no middle-man between the two parties, and there’s a level of trust between you and the person lending or borrowing.
P2P works the same way but on a large scale. It’s all online, so there doesn’t have to be hundreds or thousands of physical branches. P2P doesn’t require thousands of employees either.
It’s only one website, a few employees working behind the scenes, and the lenders and borrowers conducting transactions in a direct method.
Some of the most popular platforms include Prosper and Lending Club. Make it a habit of reading a Lending Club and Prosper review to know which one caters to your specific financial needs more.
For borrowers, this means you can get quick money with low-interest rates and quick approval. You’re not convincing a bank to lend you money, which guarantees faster transactions and fewer chances of denial.
Benefits of P2P Lending
Why turn to P2P lending instead of the traditional route at the bank?
The first major benefit is that the process is easier and faster compared to a bank. Borrowers only have to fill up an application and present proof of identification.
Compared to a bank, which takes weeks and multiple meetings before approving a loan, P2P gets the job done in days.
You also don’t have to worry about high-interest rates. While some banks will charge interest rates over 15% for a small loan, you can expect rates of 9% when applying at a P2P platform.
Worried about high fees for late payments? Those are things of the past now. Peer to peer money lending doesn’t charge you for late fees, and you won’t see your interest rate shoot up high for a missed payment either.
These benefits make P2P the ideal solution for young entrepreneurs hoping to pay off business debts or when individuals are in a medical emergency that needs quick cash.
As mentioned, borrowers only have to get online, fill up a form and present a few required documents like proof of identity or address.
The folks at Prosper or Lending Club will still do a credit check, but unlike with the banks, it only takes a few days to get a response.
There are no follow-up meetings, and while you still need a decent credit score, the target isn’t high to the point of being impossible for average borrowers.
Paying the lender back is also a quick and easy process. Everything is online, and there are avenues to make payments in a traditional, physical way too. This guarantees you won’t miss a payment due to arbitrary reasons.
Discover More Financial Guides Today
Peer to peer money lending is a great option for those who need loans as soon as possible but need more than what a shady payday loan or pawn shop can offer. You get the same stability as a bank loan but without the long lines and tedious process. You also don’t have to worry about insanely high fees.
Looking for more financial tips? Hoping to find a different kind of loan for a specific need? Do you have your own list of advice you want to share with others?
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