How To Compare Peer to Peer Loan Offers To Get The Best Deal

Comparing Peer to Peer Loan Offers for the Best Deals

Starting a new business or consolidating debt can both be exciting times for borrowers. The world of lending has changed dramatically over the years to include alternative forms of financing these opportunities. Borrowers with good credit can remove the paperwork associated with small business loans and oversight. However, here are a few tips to consider when getting a peer to peer loan or investing.

Site Campaign Styles

Every peer-to-peer lending site has a unique style and approach to lending. Some sites use campaigns that are social-oriented while others are geared towards basic small business transactions. Compare the typical lending campaigns that receive the most attention for each lending site. This will give a sense of what investors are looking for. It will also provide a sense of the types of projects that are most successful if you plan on investing. For example, sites such as Upstart look beyond credit score requirements and consider the entire picture of their career health and ambitions.

Insure Minimum Requirements

Most peer lending sites require a healthy credit score and a game plan. However, many users fail to realize that these requirements may fluctuate from site to site. Consider shopping around for interest rates as they tie into specific credit scores and campaigns. FICO scores are usually above 660 for most applications. Sites such as Prosper offer several loan types with lender ratings that vary on each application. For example, a fixed rate “C” loan may pertain to a wedding loan with average credit. The “AA” loans could belong to home improvement loans with excellent credit. The best way to insure the best rates is to check averages with each site without pulling credit.

Consider Loan Length and Type

Peer lending programs are similar to a bank by the type of interest offered. Some offer a fixed rate and others encourage some investments as a variable rate. Loans with a shorter length of repayment can offer accepting borrowers with a variety of backgrounds and competitive rates. Investors should be aware that longer loans can be more or less risky depending on the campaign. All sites should have statistics that can be compared on default rates. Borrowers can also consider the average loan length at a given site to determine acceptance rates. Most sites such as Lending Club offer no prepayment penalties and automatic withdrawal to avoid late payments.

Consider a Needs vs. Wants List

Most business and consolidation plans should take into account any risks associated with lending. A strong wish list and plan can filter out any risky types of loans. Most peer to peer lending sites have risk signals that can limit acceptance and possible loan rates. The wish list should reflect those possible risks to avoid denial.

Shopping for a good deal at a peer lending site doesn’t have to be challenging. Following simple guidelines like checking your credit report early and developing a list or plan before shopping will reduce the work. Peer to peer lending can be an easier way to get into business or refinance more quickly.

  • FAQ for borrowers searching for personal loans in Texas

    How do I decide if a personal loan is right for me?

    A personal loan is a significant commitment. Weigh the benefits to decide whether paying interest for the privilege of borrowing money in advance is crucial. Understanding your responsibilities in addition to the reasons for taking out the loan is critical to obligating your future income to make the payments.

    How does a personal loan affect my credit score?

    Hard inquiries performed by creditors are going to knock a few points off your credit score. You can increase your credit score by making timely payments and never missing a single one. Paying late can affect your credit score and block access to future loans. 

    Do personal loans need collateral?

    Personal loans are generally approved based on creditworthiness. Typically designated as “good faith” loans, the lender won’t need collateral to guarantee that you’ll repay what you’ve borrowed. Although riskier for loan issuers, unsecured loans can cripple your ability to access further credit if you fail to repay to completion. 

    Can I change my payment due date?

    Your payment due date will be set when your short-term loan is approved and will be the same date during the month. You won’t be able to change this pre-determined date. 

    What are the different types of short-term financing?

    Short-term loans, trade credit, overdrafts and credit cards are common examples of short-term financing. Typically, the repayment period is as short as a few weeks up to five years in length. Depending on the type of financing (personal loan, unsecured loan, installment loan) and lenders terms, you will generally find many loans are between six to thirty-six months for repayment.