Have you been rejected by a bank? Or are you tired of the impersonal treatment and stiff rules imposed by the big banks?
It wasn’t enough for them to take our tax money in the bail outs, now they are refusing to loan it out to hard working Americans who want to invest in their business or pay down their debt. Luckily, I discovered a better way and I want to share that with you.
Person to Person lending is about getting a loan or lending money for whatever you may need without having to go through a bank. It usually involves going through the whole process online. These online companies specialize in what is known as “person to person” lending or “peer to peer” lending. How did I find out about this cool alternative to getting a loan and taking out the banks from the equation? Through my own hard experience; my husband and I were going through the hard times as everyone in the country with an increased unemployment rate, inflation, debacle of the housing market and salaries being shrunk, so we wanted to refinance our house to use that loan money to expand our business, pay for our daughter’s school and replace our old beat up car.
We of course went to through our bank like everyone else would do, like you would think of doing. We approached our bank, and told them what we wanted to do. First, you have to understand that we are hard working Americans, we always paid our mortgage on time, we have never defaulted on any loan, we paid our taxes, we have little debt and have basically followed the rules. We never thought we would go through any problems. If the bank would help anyone, it would be us.
But we were wrong.
The process was anything but easy or useful. It was a shock to us because the moment in our lives when we actually needed to borrow money through the right channels we were given grief and a very hard time. We thought if this is the way they treat the ones who actually follow the rules, we could not imagine how they would treat the ones who were actually having a hard time – like the family who needed to borrow money to pay for their kids’ school, the entrepreneur who needed a loan to invest in his new business venture or the already established small business owner who needed a loan to invest in his business to keep it afloat.
But no, we got screwed by the bank. We had to fill out a ridiculous amount of paperwork, had to mail it and pray that they would get to back to us soon- because we needed the money as soon as possible like you would. But every week, they would send a letter letting us know that they needed a new piece of documentation and that if we did not respond within a day then we would have to restart the whole process, so we did this for a month until we got tired. The forms they were requesting we had already sent to them and we got the feeling that they were stalling and trying to make the process so long, hard and cumbersome that we would just give up. And after about three months we did give up.
Enter peer to peer lending
One day, I saw a news report about peer-to-peer lending and I was amazed. I could not believe it, so I made a note and went online to find out all I could about this awesome option that most people don’t know about. So what is “peer to peer” lending also known as “person to person” lending? It is basically applying for a loan through an online company that offers good rates without having to go through a bank. You visit these companies like Lending Tree or Prosper, you create an account, they do all the credit checks and post the amount you want to borrow. If you want to lend money instead of borrow it, you can become an investor or lender. These are usually individuals who want to invest their money by providing loans and making a profit in the interest you pay. It is a win-win situation for borrowers and investors without the hassle of a bank or any other entity.
Now you may ask yourself why do this? Well why not; you don’t have a lot of viable choices out there. The banks are not lending and in fact are making the process painful like what we went through, so you are really left without options but “person to person” lending is an option – an option I would have tried if I had known about it. And if you have money to invest, “peer to peer” lending is a great way to invest your extra cash in a safe way and make more money. Plus if you want to look at the human factor, if you become an investor through “person to person” lending you would be proud to know you are helping people who need it and will pay back on time, because they are really interested in making the loan process work.
OK, so if you need a loan and are going to use one of these online “person to person” lending companies, you can apply for any type of loan, for example: small business loan, personal loan, debt payoff, education loan, etc.
A little while ago, I gave you a small snapshot of how this works but you probably have more specific questions. I will answer those now. The first question you are asking yourself is if this process is safe and how will it affect my credit score? The process is easy and safe. First, you have to fill out a form online and provide some personal information. Let’s use Prosper.com as an example, if you were going to use them, you would have to create an account. You will first be asked a little information about the type of loan you want, the amount and your credit score as seen the following screen shot.
Next, you will be asked to provide some personal information and create an account with Prosper.com.
With this information, the company will check your information including your credit score to protect you against scams. The better your credit score, the better interest rate that you would receive but don’t be discouraged you can be funded for a loan even with a slightly higher interest rate if your credit score is not that great. After they check your information and credit score, then Prosper will assign you their own credit rate; for example, Prosper assigns what they call “Prosper Score” to the borrower’s record, and this “score” is based on your credit score. This “Prosper Score” will be used to figure out your loan’s interest rate. After you are checked out by the company and are assigned a company’s score, like the “Prosper Score” your information is released to potential investors.
If you use Prosper.com for example, the next step is to create a listing. In this listing, you explain the type of loan you need and why, then potential investors can read this and decide to fund your account or not. Below is an example of how the listing will look like if you use Prosper.com
Your profile listing will be active for 14 days to see if you get it fully funded through investors. If by the end of the 14 days your loan has not received the necessary funds, then you would have to start the process again. But don’t worry this happens rarely, since most people do get their listings funded at the end of that allotted time period.
Once the interested investors have invested the money in your profile, then the loan money will be deposited in your bank account. In the company example of Prosper, the company may do one more identity check on you before depositing the money as an added precaution. How do you pay your loan? Companies usually make it really easy for you, in the Prosper example; the company will automatically withdraw the loan payment from your bank account every month.
You now have to think about fees because there are not many to consider but they are fees to pay for example, if you go through Prosper, you need to pay a closing fee. Now, this closing fee depends on your loan amount and interest rate, and it is a percentage of the loan amount. Now the thing to remember is that Prosper will take this fee before your loan amount is deposited into your bank account, so you need to consider this percentage amount when thinking of the total amount of money you need to borrow since it will be deducted automatically before you have access to it. I recommend you review all the fees with the company before finalizing the process so that you are familiar with them.
Finally, I recommend you try Prosper.com because their process is very easy and straight forward, but you can try any online “peer to peer” company that fits your needs. Another big one is lending club, they have a great write up on how it works. Whichever you pick, I’m sure the experience will be easy and your chances of getting the desired loan that you need are almost 100%, so check it out because there is really nothing to lose and all to gain. Good luck! And may you borrow and invest safely with this cool option you probably didn’t know about. And spread the word because we all need the help sometime in our lives.
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