Why Choose a P2P Lender?

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Borrowers Looking for Flexible Lending Will Love This Loan

A peer-to-peer loan allows for lending without a bank. The loans are funded by individual investors looking for creative ways to profit off of interest rates. These loans happen online and are often facilitated by an organization that charges a small fee to make a little money themselves.

There are good reasons to choose a peer-to-peer loan to cover your next big expense. These loans typically have flexible terms and qualifications, they don’t require collateral and come with a fixed rate.

Flexible Loan Terms and Qualifications

Peer-to-peer loans became popular when banks adopted serious restrictions for lending after the economic crisis in 2008. Individuals were having a hard time securing loans and this created an opportunity for a new kind of investor.

The very nature of these loans is that they’re less restrictive. Even though credit scores are considered before offering a loan, someone with a lower credit score may have an easier time getting approved through a peer-to-peer loan instead of a bank or credit union.

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The terms of these loans are also flexible. The borrower has a say in how much is borrowed, the length of the loan and how the money is spent. Peer-to-peer loans can be used as auto loans, personal loans, business loans and more.

No Collateral Required

Most traditional loans require borrowers to pledge an asset to secure a loan. For example, in the case of a home loan, the home purchased with the loan serves as collateral. If the homeowner defaults on the loan, the bank becomes the owner of the home and can sell it to recoup what was lost on the unpaid loan. Most peer-to-peer loans are unsecured and do not require collateral. This makes them attractive for a variety of reasons.

Fixed Rates

Running a bank is expensive, but the organizations that facilitate P2P loans have much lower operating expenses. There are no branches to maintain and fewer employees. Because of this, lenders are often able to offer a lower interest rate than what might be found at a traditional bank.

Many of the websites, like Prosper and the LendingTree, offer fixed-rate loans. When the interest rate is fixed, this means that the payment and interest charged on the principal stays the same through the life of the loan.

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Peer-to-peer loans come without the worry of rates that could fluctuate or the need to pledge something valuable as collateral. For many, these loans are a chance to pick a borrowing option that is a good fit for their specific circumstances and needs.

~ Here’s to Your Financial Health!

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