Thursday, June 7, 2012

4 Situations to Consider Peer-to-Peer Lending

Social lending provides borrowers with an alternative to traditional lenders. With social lending, you will be borrowing directly from an individual that has money to lend. Here are a few situations that you might want to consider social or peer-to-peer lending.
1. When Interest Rates Are Lower
Many people that need access to money quickly consider forms of lending, such as cash advances or payday loans. While these might be able to provide you with quick and easy money, the interest rates that they charge are extremely high. In most cases, you will have to pay as much as 300% APR in order to gain access to this money. If you take a look at peer-to-peer lending instead, you will be able to secure lower interest rates. Most peer-to-peer lenders will provide you with a very reasonable interest rate on the loan that you need. In this way, you will save quite a bit of money.
2. Long Term Loan
The desired length of the loan that you need will also play a role in your decision. Most personal loans that you can get from predatory lending sources, such as a cash advance lenders, will be for a very short period of time. In most cases, you will have to repay the debt in only 30 days. This does not provide you with much time in order to come up with the funds that you need to repay the debt. With a peer-to-peer loan, you should be able to find much longer loan terms to work with. Having a longer term will allow you more flexibility when repaying the loan. It will also allow you to have a much smaller loan payment to work with since you are increasing the time frame of the loan.
3. No Collateral
Many types of loans will require collateral. For example, you might have to put up your car title as collateral in order to get the money that you need. This places extra pressure on you and puts your car at risk. With social lending, you will not have to put up any form of collateral in order to get the money that you need. Your lender will lend you the money that you need, based on their own credit standards of credit and collateral. They are usually willing to negotiate with you.
4. No Employment
The main factor in determining whether or not you can get alone from a cash advance lender is your employment. Most of these places will not look at your credit score, but will check to see if you are employed. If you are in a situation where you need money for a project, but do not currently have employment, peer-to-peer lending might be your best bet. These places tend to rely on your credit history more than anything else. Therefore, as long as you have a good credit score, you may be able to get the money that you need even if you are between jobs.

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