Peer-to-Peer Lending: Saving the Day and Reducing the Debt in Financial Crises

Posted on: 18 July 2016

Are you in need of a personal loan? Perhaps you have a number of issues that are preventing you from getting a traditional loan through a bank. You may have also exhausted your means of getting small loans from friends and family. These are common obstacles that many people today face, and even if your needs and ability to acquire a loan are different than other people's, do not feel as though you will not be able to get a loan. Peer-to-peer lending could be a loan option for you.

You are being extended offers for secured loans, but you need an unsecured loan.

Sometimes people lack sufficient credit to qualify for unsecured loans, or they may have issues obtaining unsecured credit due to derogatory information on their credit reports. This can pose an issue when an emergency loan is needed for an inconvenience such as vehicle repairs, especially if the collateral needed to secure the loan is your vehicle.

You desire the option to repay the loan without penalties.

There are some loan options that are designed to ensure that lenders make exorbitant amounts of money from borrowers. This may come in the form of fees or penalties. For example, you might be penalized for repaying a loan before it matures. Regardless of where you get a loan, always review penalties and fees before accepting an offer.

Keep in mind that many peer-to-peer lenders have diversified portfolios that consist of many small investment loans, and your loan would likely represent a fraction of the contributing investors' portfolios. This is one way they are able to combine their resources and extend flexible and attractive loan agreements that may not include fees and penalties. Some peer-to-peer lenders may even offer loan matching, which means that they will negotiate and possibly match offers extended to you from elsewhere. 

You want to consolidate your credit card debt, but you are having issues getting a new card with a high credit limit. 

If you have credit card debt, your high balances may be interfering with your qualifying for a new credit card to be used for debt consolidation. Peer-to-peer lending could benefit you if you can acquire a better APR. Keep in mind that consolidating the credit card debt through a loan will mean that you should only use your cards for emergencies and only charge what you can afford to pay off each month. This is because consolidation will do little for improving your finances if you accumulate the debt back on the cards. 

You are leery about hard inquiries and being turned down for a loan at local lending institutions.

You may not want anyone in your local area to know about your financial issues. Many peer-to-peer transactions can be completed online, and your loan information will be confidential. Some peer-to-peer lenders may perform soft credit inquiries, which will not impact an already suffering score.

For more information, talk to companies like Crossroads Investment Lending