Peer-to-peer lending is a non-traditional form of loan that basically eliminates banks and other financial institutions as middle men between lenders and borrowers. Instead of applying to a bank for a personal loan, borrowers can apply to a peer-to-peer lending site and receive a loan that is funded by individuals. There are several benefits of this type of loan, for both lenders and borrowers.
Easier Approval for Borrowers
Peer-to-peer lending is growing astronomically, with more than two billion dollars a year being lent out per year in just the United States. One of the main reasons for this growth is that the approval process is often easier than the approval process for traditional loans. While banks have become increasingly stringent about credit scores, with peer-to-peer lending individual lenders will sometimes overlook shaky credit histories.
Simple Application Process
Unlike the mountain of paperwork some banks and credit unions expect borrowers to complete, peer-to-peer lending applications are streamlined and can be filled out quickly online. In some cases, you may be required to upload copies of tax documents and give access to your bank account, so it's a good idea to have these things handy when you begin your application.
Quick Funding of Loans
Once you're approved for a peer-to-peer loan, funding tends to happen very quickly, often within a couple of days. You will most likely want to link your new loan to your bank account so that your funded loan can be directly deposited. This will also make your payments easier, since you can set up automatic payments from your linked bank account.
Great Interest for Lenders
Not only are peer-to-peer loans great for borrowers—they're also a good deal for lenders. In fact, lenders can expect annual returns in the 10% range, which is much better than interest earned on traditional savings accounts and many investments.
Affordable Payment Plans for Borrowers
A major perk of peer-to-peer loans is that the interest tends to be quite reasonable and you can usually structure the payments in an affordable way. During the application process you will be able to adjust the loan amount, monthly payment amount, and overall length of the loan in order to keep your payments as manageable as possible.
Whether you're looking for a personal loan, or a new way to earn interest on an investment, peer-to-peer lending is definitely worth looking into. Talk to a prosper review professional for more information.