Because of the internet and social media, peer lending, or peer– to – peer (p2p) lending, has become quite popular. The entire process is conducted via a peer lending website without the involvement of a costly financial institution.
Here’s how it works:
- A lender decides how much money to lend people.
- The loan is an investment as the lender decides how much to charge in interest.
- The borrow may need to borrow money for any number of reasons and must convince lenders they are a worthy risk.
- Once the process is complete, borrowers make fixed monthly payments and investors receive a portion of those payments in their account.
While I don’t condone debt and borrowing on this website, peer – to – peer lending can provide good investment opportunities. There are also some valid reasons why people need money, whether it be debt consolidation, emergencies, or for other reasons. As the investor or lender, you can consider peoples’ personal loan descriptions among other qualifiers.
Prosper and Lending Club are two of the most well-known peer – to – peer lending companies that facilitate the lending and investing process for members. If you’re interested, these are two service providers worth checking out.
Featured Peer Lending Service Providers
Prosper - Prosper was opened in 2006 and has over 1,080,000 members. Borrowers can list loans between $2,000 and $5,000 and investors can invest as little as $25. Investors consider borrowers’ credit scores, ratings, and histories. However, they can also consider borrowers’ personal loan descriptions and endorsements from friends. Prosper facilitates the entire process via their website which includes funding and servicing the loans.
It’s easy to get started. Borrowers provide basic application information, create a customized loan listing and watch their loans get funded. Investors set their investment criteria, invest in loans manually or through automated plans, and get borrower payments directly in their account. Get Started.
Lending Club – Lending Club was opened in 2007 to create an alternative to banks with great rates for borrowers and lenders. They are an online financial company that brings together creditworthy borrowers and investors to help both parties benefit without all the red tape and cost of traditional financial institutions. They have facilitated the funding of $289,003,550 loans to date.
It only takes a few minutes to join, For borrowers, you can apply for a loan and get an instant rate quote. For investors, you can build a portfolio that can earn more than other investments with similar risk. The entire process is facilitated by Lending Club online. It’s fast, confidential, private and secure. Get Started.