P2P personal loans – the smart way to obtain your personal loans

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First off, P2P loans are probably one of the greatest creations the internet has brought us. In the past your only option for a personal loan was going to a bank or another traditional lender and if you didn’t have a great credit score chances are that you would be declined for any loan at all. If your credit score was good and your personal loan application was accepted you would pay a outrages APR even though you might have thought that you received a good deal.

What if your car broke down and you don’t have the money to fix it? What if you need to buy some expensive books for school? What if you want to consolidate your debt? Got a small business your starting? Want to go on a trip or vacation? Got some serious medical expenses? Whatever your need is, P2P lending can help you get the money you need fast!

What is P2P Lending?

P2P lending is a term that applies to companies that make personal loans online. No, not just any company who offers loans online! The company is in charge of everything but do not actually loan you the money themselves. Instead the money that is loaned to you is from lenders who make loans to people. These are regular people just like you and me who have some extra cash and are going to earn some extra money off of that money. These people are playing bank and will accept a lower APR from you than any bank ever would. Another thing is that your funds add up from different lenders, not from just one person.

For example, let’s say you applied for a $5000 loan. You will make a listing on why you need the loan and investors will read your listing. If they like your listing they will bid to loan you the money you need. For example let’s say Joe sees your listing and wants to make a loan, Joe will contribute $50 to your listing. Mary now sees your listing and loans you $100. Michael sees your listing and loans you $50. Michelle now sees your listing and loans you $200. So far you have $400 but it will just keep adding up and up until your loan request is fully funded.

There are a few different P2P lending sites out there but one of the most popular ones is Prosper.com. The thing that makes Prosper so good is that the lenders actually bid to make you a loan. For example, let’s say that your loan has been fully funded but you listing still has two more days to go and your APR is at 19%. The bidding does not stop as other lenders will want to get in the action of loaning money to you and will out bid others and as a result your APR gets lower and lower.

Some of the other P2P loan sites out there are Loanio.com, Zopa.com and lendingclub.com. Prosper.com is my personal favorite. All of them work very similar as they are all P2P lending companies but they all do defer in a way. They all have different minimum credit scores you must have to apply for a loan. Don’t worry though, your score doesen’t have to be over 700 or anything like that. If you have a fair credit score you will be OK. Now, if you have a credit score of 450 or something like that you will have some serious problems. Of course those with great credit scores also use P2P lending sites to get loans. Why would they when they can get a loan the traditional way? Because they will get a much better APR and save themselves lots of money in the long run.

All P2P companies have a maximum amount that you can borrow. With Prosper the maximum that you can borrow is $25,000. If you only need $1000 you can borrow that little to. Thank goodness for P2P loans! If you ever feel in need of obtaining a loan please do yourself a chance and check out the mentioned sites. They can save you a lot of money!

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