Why Should You Consider a Peer-to-Peer Loan When You Need Money?

When you need to borrow money, there are several sources to which you might turn. A bank, of course, is the most obvious first choice for many people. Whether through auto loans, personal loans or lines of credit, banks help millions of people each year obtain the money they need for a specific purchase. In addition to banks, there are payday lenders and auto title lenders that will allow you to borrow money against your upcoming paycheck or automobile, respectively. These lenders often charge exorbitant rates of interest. Friends and family are also potential lenders when you are in need of cash. Borrowing from those close to you, however, can lead to relationship problems.

There is one more source of money that many people fail to consider: peer-to-peer lending. Peer-to-peer lending is a relatively new way of providing money to those who are in need of cash, having become popular only in recent years. Through peer-to-peer lending, you borrow money from strangers at terms that you set yourself. This is typically done through a third party such as a peer-to-peer lending company or website. You set the amount you want to borrow and the interest rate you are willing to pay, and the third party finds people to fund your loan.

You may not have considered the option of peer-to-peer lending before, but there are several benefits that make it an attractive option when you need to borrow money. First, peer-to-peer lending is an excellent choice if you have average or poor credit. Many traditional lenders are unwilling to loan you the cash you need at an interest rate you can afford if your credit history is not good. Some will not even lend you the money at all. Those that do offer a loan might demand an interest rate of 30 percent or more. It will be much easier to find a lender when you seek out a peer-to-peer loan, although you should be aware that if you have poor credit, you may still have to pay an interest rate greater than 10 percent to get funding for your loan. Still, you can get a rate that is far less than what you would get from a traditional lender in most cases.

Another benefit of peer-to-peer lending is that it can provide an affordable way for you to consolidate your credit card balances into one loan that charges a lower interest rate than the average rate you are currently paying. In years past, credit card companies fell all over themselves to help you consolidate your balances at a great interest rate. Yet such offers are rare today. If you have good credit, however, you can lower the rate you are paying on credit card balances to well under 10 percent when you get the right peer-to-peer loan. Even if your credit is poor or average, you can still get your current rate drastically lowered when you find peer-to-peer lenders who will loan you money to consolidate your credit card balances.

Third, taking out a peer-to-peer loan also means that you avoid the embarrassment of asking friends or family for money. Nobody wants to advertise that they are in a rough spot financially, especially to their loved ones. Peer-to-peer lending lets you get the help you need without opening yourself up to embarrassment in front of those you love, and it helps you keep your financial affairs private.

A peer-to-peer loan also enables you to avoid the relationship problems that can occur when you borrow money from friends or family but then have difficulty paying it back. There are always financial consequences if you get behind on loan payments, but if you are paying back a loan from family or friends, you may get the added trouble of family strife. With peer-to-peer loans, you avoid that possibility altogether.

Finally, a peer-to-peer loan is a great way to get money for that business you have always wanted to start. Banks and other lenders may have turned you down in the past, but there are probably others out there who will fund your start-up business or new product development. Get a loan through peer-to-peer lending, and you can begin turning your dream into reality.

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