Peer-to-peer loan is the new trend in the loan market. These are online clearinghouses that provide all type of loans to borrowers. In peer-to- peer loans people are matched with investors so that the procurement process gets easy.
The two major P2P sites are Prosper and Lending Club. Both these sites have seen stupendous growth in their business fortunes. Individuals have benefited hugely by the hassle-free loan programs. This type of loans are set to grow hugely, as investors have found a green field in this sector and have started pumping huge amounts.
Unlike markets where clearance for loans languishes for months, peer-to- peer loans can be got within two to three days. Another reason for the rise in demand for these loans is because they provide loans that traditional banks would avoid.
Though credit cards offer unsecured loans, the risk with seeking unsecured loans with credit cards is that though they offer introductory zero percent to start with, after a specific time period the rates zoom to as high as 20+ percent range. This can burn a big hole in your pocket and more often than not perpetuate your loan repayment.
P2P sites try to tap people having credit cards with high interest rates. Most people seeking loans from them do it to pay off their debts at a lower rate. Moreover, the interest rates are more attractive compared to other sources of unsecured loans.
This brings us to the most important question: Is this loan meant for every one? Not really if you go by statistics. The fact that Lending Club has sanctioned only 12 percent of the applications since 2007 is reflective of their selective nature. If your credit score is to less than 650, you stand ruled out for a P2P loan.
If your credit score is better off, this can be the best alternative to clear-off your debts. In our next blog you’ll get to know how to make the best of P2P loans.
Peer To Peer Lending Sites
• Lending Club
• Random Thoughts Blog by Anil Gupta
• P2P Lending Tools
P2P-Picks (in beta)
• Interest Radar
P2P Lending Forums
• LendAcademy Forum