One of the best options you can rely on when you are in debt or want financial help is to acquire a loan. A peer to peer loan may be your best bet. It is also known as “social lending” because it involves people lending money to those who need it. It eliminates financial institutions from the equation, which explains the “peer to peer” part of the name of this type of loan.
Peer to Peer Loan Application Process
Generally, loans that come from peer to peer lending is unique in comparison to others. The lenders are considered investors. Borrowers apply online for a loan and must provide their financial and credit history. Sometimes, a lender may or may not ask the individual to verify their income. Sometimes, a borrower is required to submit tax information such as a W-2 form for verification. On average, it can take between three to five days for a loan to be approved and another two or so days for the borrower to receive the funds.
Advantages of Peer to Peer Lending
There are a number of advantages of peer to peer lending for both the borrower and the lender. In addition to the application process being fast and easy, these are additional benefits:
- Funding is Fast: When you apply for a peer to peer loan, one of the great benefits you can look forward to is the speed of the funding. Generally speaking, on average, it can take anywhere from one to three weeks to receive the money for your loan. The exact time you receive the funds depends on the size of the loan.
- Reasonable Interest Rates: Interest rates on peer to peer loans tend to compete with those included on loans acquired from banks. In some cases, that number can be as low as seven percent APR on peer to peer lending. When a borrower is approved for a loan, there will be different time frames offered for paying back the loan. The time frames range from one, three and five years and the interest rate is adjusted depending on the term the borrower chooses.
- Greater Funding Rates: Borrowers have the advantage of funding rates having increased over time. That means that it’s possible to receive a loan anywhere from as low as $1,000 to as high as $35,000.
- High Returns: One of the best advantages for lenders is that they are able to get a return of an average of 10 percent depending on the type of loan and its terms.
- Spreading Risk: The majority of borrowers are regular everyday people who need loans to pay off their credit card balance or a few extra dollars to make repairs on their home or purchase a vehicle. Since they are people and not institutions, there is more likelihood of them mentioning the option of peer to peer loans to other people who need a loan.
- Lenders Choose Their Borrowers: With peer to peer lending, the lender has the advantage of choosing which borrowers qualify for their loans. They get to invest in borrowers based on their own interests and preferences.
Overall, peer to peer lending is one of the best options currently available if you are in need of a loan. It is convenient and offers a wide range of options whether you need a few hundred or even a few thousand dollars. There are also several peer to peer lending companies online from which to choose.