What is a Peer-to-Peer Loan?
Peer-to-peer loans (P2P) are a way of lending that has been increasing in popularity over recent years. The concept is that people who want to borrow money are matched up with those who will lend it to them.
They are an alternative option if you have difficulty getting a loan from a bank or building society, depending upon your credit rating
What You Need To Know About Peer-to-Peer Loans
- If you want to borrow some money, peer to peer loans can be cheaper than banks or building societies, especially if you have a very good credit rating.
- Some peer to peer websites have no minimum loan amount (in contrast to most banks and other mainstream lenders) which might suit you if you only want to borrow a small amount for a short period.
Peer to peer platforms also typically charge a fee to arrange the loans.
Interest Rates for Peer-to-Peer Loans
They can offer lower interest rates than traditional loans. Whether or not this is the case for you will depend on certain factors such as your credit rating.
Some of the best deals are available only if you have an excellent credit history and no previous problems.
If you apply for a loan, you’ll be credit checked using a credit reference agency and must pass the peer to peer company’s own checks.
Will I qualify for a loan?
To apply for a loan go to one of the P2P lending sites and register, select the amount you want to borrow and the length of the repayment term.
You will see if you’ll qualify for a loan and the interest rate(s) you’ll have to pay.
Depending on your credit rating and the individual platform, you might be offered less than you want to borrow or you might be offered a certain amount at one interest rate and different rates of interest by other lenders.