More People Turn to Peer-to-Peer Lending for Personal Loans

[Nov 10, 2008.]

 

So you need money but can't get a personal loan from a bank. Before giving up on finding the funds you need, it may be worth it to check out one of the peer-to-peer (P2P) lending sites that are helping people with all kinds of financial situations get the personal loans they need.

Web sites such as Prosper, LendingClub, and GreenNote are helping people get the money for things such as student loans, paying off debt, and medical procedures. You'll have to register with a site and have a credit check to receive a credit grade. Then you'll post your request for funds and wait for people to bid on how much they're willing to lend. In many cases, several bidders will fund your loan request.

The better your credit the more favorable loan terms you'll receive. But even people with bad credit are able to obtain personal loans in many cases. Interest rates can range from 7.4% to 19.4%, according to Forbes. You'll also have to pay a one-time fee of 1% to 4% of matched loans and a servicing fee of about 1% of the outstanding principle. Some sites may also require a fee to set up a loan. Other sites may require a fee to verify salary or bank account information.

But some people with bad credit may still have a difficult time obtaining a personal loan through a P2P site. In some situations finding a co-signer or detailing your plans for repayment may convince lenders to approve your loan. You could also try one of the social lending sites that allow you to get friends and family to fund your personal loan. If you have trouble repaying a loan, people you know may be more willing to adjust the terms and work with you than strangers.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.