Need a loan? Well, youre in luck. Now is one of the best times in history to get a loan. Technology has made it easier and much less expensive to borrow money for personal causes or a business. I’m talking about peer to peer lending.
Peer-to-peer lending is a new way to secure a loan for just about anything, with rates that are lower than traditional banks. You just list your loan on a p2p lending website and others around the world will fund it!
Since these platforms are run mainly online, you save time and money by avoiding brick and mortar financial services. By lowering operating costs and connecting lenders with borrowers more directly, peer-to-peer lending sites like Lending Club and Prosper are making it easier to get the loan you need, whether it is for a new house or car, a business, or something else.
Maybe you know a little about P2P lending, or maybe this is the first youre hearing about it. Youre probably thinking, This sounds great, but how do I get one of these loans? Keep on reading for a simple 5 step guide on how to apply for a P2P loan. Ive even added some tips on how to make sure it gets fully funded!
1. Choose a Platform
Once the business models of the first few peer-to-peer lending platforms proved promisingly useful, a lot of new ones launched to take advantage of the fairly new market. As a result, choosing platform that youre sure is both reliable and run well can be tricky. You can start your search by checking out our list of the top P2P lending sites like Lending Club, Prosper, FundingCircle, Upstart, Kiva, and Zopa.
A few things to take into account when narrowing down your options:
- How is their customer service? Is the platform reachable by email and phone? Do they respond to questions promptly and respectfully? If the platform is well-staffed and loves what they do, they will want to answer any questions you have and reassure you that they are the best option out there.
- What are their rates and platform fees? Are they more or less expensive than other platforms? Do the platforms features justify the price?
- What are the maximum and minimum loan amounts? Make sure that the platform will let you raise the amount you need! Prosper, for example, offers loans from $2,000 to $35,000.
- What are customers and the media saying about them? Being able to find information, reviews, and articles about a peer-to-peer lending platform is one thing that can reassure you that they are a legitimate and transparent company. If you search for them and cant find very much information, they might not be the best choice.
- How long does it take to get approved?
- How do payments work?
- What are the qualifications for getting a loan?
- How long are their loan terms?
2. Apply for a Loan
If youve found a platform that looks promising and youve done your homework, its time for you to jump in and apply for the loan you need! If your credit is good you can get pretty amazing rates with these P2P lenders. Also, lots of our readers use these platforms refinance their credit card debts to pay them off faster. You can learn more about how to use crowdfunding to refinance your debt in this article.
Applying for a P2P lending loan is actually pretty simple and only takes a few minutes. All you need to do is enter your loan details and some personal information. The platform uses that information to verify your identity and check your credit score. Sometimes applicants are asked to provide additional information or verification. The sooner you send in these documents the sooner you will get your loan.
Once your loan is approved, you will have the opportunity to customize your listing with a title and a description of why you need the loan. Keep these to the point and remember that proper grammar and spelling is important!
3. Investors Fund Your Loan
When your loan is live it will be available for investors to find on the platform and review it. They may then decide to invest in it. Quite a few institutional and individual investors have gained interest in P2P lending, so getting fully funded can take a lot less time compared to personal and donation-based crowdfunding projects.
It can help if you get some friends and family to invest in your loan and recommend your loan to their networks, especially if this is your first loan on the platform.
4. You Get Your Funds
After your loan is fully funded, it generally takes a few days for funds to be deposited in your account. For safety reasons, the platform may take this time to review your loan information. Make sure that all of the info you provide is current and accurate, because otherwise you risk having your loan denied at the last minute.
5. You Make Monthly Payments
Now, all thats left for you to do is to make your monthly payments and keep your loan account in good standing. Luckily, most P2P lending platforms dont penalize you for early repayments, which gives you a chance to save even more!
Conclusion
These 5 steps should give you a pretty good idea of how much shorter the timeline is to get a loan on a P2P lending platform compared to traditional loans. In some cases, satisfied customers have applied for a loan, been approved, funded, and received the money they needed in a WEEK!
To learn more about P2P lending, check out this post.
Feel free to leave any questions or comments below!
