Peer to Peer Lending helps consumers who have some extra money to invest to help out those who need to borrow it. It is often abbreviated as P2P Lending. The idea behind peer to peer lending is not a new one. It has grown exponentially online in the past ten years thanks to the Internet. The benefits of this form of lending are that it reduces usurious interest rates dramatically. This means that both consumers and the overall economy benefit as it decreases the amounts of payday loans.
Prosper is one of the largest P2P lending companies in America. It loans out amounts as high as $35,000. For this they charge a closing fee of 5%. Their interest rates range from 5.9% for extremely good credit to 30% for credit that is only fair. These rates are often lower than what credit card companies charge and substantially lower than payday loan companies which can command over 600% in a single year.
Loans with Peer to Peer Lending companies like Prosper are unsecured. The applicants’ credit history earns the approval, though it does not require perfect credit to obtain them. The money itself comes from surplus money which normal people across America wish to invest.
These Peer to Peer Lending companies generally allow their loans to be utilized for most any type of need. They encourage ones that are financially responsible. Debt consolidation is one of the big reasons why individuals take out these loans. The interest rate is often more affordable than the ones the credit card companies charge. Such a loan helps individuals to pay off loans quicker and with a larger amount of the money attacking the principal rather than interest.
Home improvement is another commonplace reason that consumers employ these peer to peer loans. The traditional means of financing such loans comes from bank issued home equity loans or lines of credit as well as from credit cards. The home equity loans often require a great amount of time for approval and commonly include expensive fees. This has encouraged smart home renovators to seek out Peer to Peer Lending companies.
Small businesses like these loans which help them to increase their capital for expansion. Traditional banks will often require a lot of paper work and documentation in order to issue an approval. P2P lending operations such as Prosper only need credit scores that are decent.
Many consumers have turned to these companies for financing for car loans as well. Having this money pre-approved and in hand can save more than just dealer approved financing costs. It can strengthen the buyer’s hand in negotiating the final price on the vehicle as the money for the purchase is effectively offered to the dealer in cash instead of financing.
One of the many advantages to these Peer to Peer Lending companies is that they do not charge early repayment penalties. This makes them effective financing vehicles for many different types of needs. Individuals have employed them in place of short term loans and to pay for surgeries not covered by insurance, among other uses.
Besides this, P2P lenders do not require the prime credit scores that most banks do. Consumers can access substantial loans of as much as $35,000 with credit scores that start at a fair 640.