Online Loans With Bad Credit – Why Getting A Loan With A Peer To Peer Lender May Be A Great Idea

Online loans, they’ve become the new fad in lending. Loans have always been popular for many reasons, whether it was for personal, business, auto or mortgage use, loans have always been a way for people who need it to get funding fast. In the past, it was at banks that people generally sought the funding they needed, but in today’s computer and smart phone age, online loans have become the method of funding of the future.

If you have average, fair or poor credit, online loans can still be a great option. While it’s true that a more traditional lender, like a bank or a private financial institution operating online may not approve your loan, there is still another great option out there when you’re searching for funding, peer to peer lending.

Peer To Peer Lending

As online loans became more and more popular about six or seven years ago, someone came up with a brilliant idea, why not let people invest in others? Why not let people invest in people? This is how peer to peer lending was born. Peer to peer lending sites are websites which offer people the chance to invest in people.

If someone needing a loan goes to a peer to peer lending site and lists that loan, once they decide the amount they want, they can list the loan and give a few details about the reason they would like the loan they’re asking for. Whether it’s for business, personal or other use, once they’ve decided on the reason, they can add any details they like, and list their loan for free. Once investors see the loan, they have the option to invest in it or not. The loan is listed anonymously, so the “investors” never really know the name of the person who is getting the loan.

Let’s say a person needs a loan for $10,000, if they list it on a peer to peer lending site, some people might invest $25, the minimum for most peer to peer lending sites, and some might invest $1,000. This gives people the option to invest a little or a lot in others and their loans, a great option for having multiple people invest in one particular persons loan.

Credit Scores

Credit scores are rated on a scale from AA to F. This works out great because although people with an AA credit score may seem more likely to get a loan, it’s not always the case. See, this is where the amazing idea of peer to peer lending works wonders. Those with a supposedly better credit score are going to have a lower interest, and investors are going to earn less money off of the interest when this particular borrower pays off their loan.

For people with credit scores that are in the C, D & F as well as E ranges, the person is going to have a slightly higher interest rate on their online loan. This is an advntage for the investors once that person goes to pay off their loan, as the investors have the potential to earn slightly more money off of a loan with a higher interest rate because the credit score is slightly lower.

How does this work out? It gives people with all types of credit scores the opportunity to get great loans anonymously. We’ve compiled a list of benefits to peer to peer lending sites for borrowers, benefits that help offer people a chance to get a great loan online with a lot of time to pay it back.

Benefits To Peer To Peer Lending Sites

1.) Anonymous Borrowing

When listing your loan and borrowing money, there are many things you can include. The amount of your loan, the reason for your loan, any details you would like to add such as comments and any reasons why you would be a good borrower. When you actually list your loan, you remain anonymous to borrowers. People don’t know your name, they don’t know anything about you, you’re anonymous to the lenders.

2.) The Interest Rates

One of the most important things to talk about is the interest rates. The interest rates from peer to peer lending sites can really be great because their competing with other traditional loan sites, as well as other peer lending sites to get the best interest rates possible from their borrowers. How does this help you? Well of course lower interest rates from the website.

3.) A Great Alternative To Many Other Options

Peer to peer lending sites offer a great alternative to payday loan or installment websites for online loans. Generally these websites tend to charge insanely high interest rates, and with payday loan & installment loan websites you usually have to pay your loan back within a couple months, not the case with peer to peer lending websites as we’ll outline in our next point.

4.) Long Time To Payback The Loan

One of the best aspects to peer to peer lending websites is that you have a long time to pay back the loan, generally two to five years. By making monthly payments over a long time, your monthly payments will be much lower than they would be otherwise, say if the payback time was only a couple of months or a year. By having a much longer time to payback the loan, you have a lot more options and of course, very importantly lower payments when paying back the loan.

5.) Speed Of Getting A Loan

With many banks as well as other loan sites, it can be a long time until you have your account funded with the loan. This can really put people in a jam because when people need the funds fast, waiting a long time isn’t really the best option. With peer to peer lending sites, online loans are generally funded very fast once they are funded and approved. This is a great aspect to peer to peer lending sites, having the money in your account fast and not having to wait a long time really helps people use the loan for what they want or need.