Peer-to-Peer Bad Credit Loans are a type of loan that allows you to borrow from an individual or group and not a financial institution. As a borrower, you will get a lower interest rate when compared to the interest your banks offer you. On the other hand, the investors will earn from the interest. Hence, it is a win-win situation for both sides.
What are the pros of Peer-to-Peer bad credit loans?
Peer-to-Peer loans are powered by a vast network of borrowers and lenders. The lenders will earn money instead of keeping the stagnant cash on their bank account, while the borrowers will achieve better interest rates. What are the advantages of these loans?
- Convenient lending process. The platforms used for lending money are easy to use, and you can get money quickly.
- No need to justify the funds. You can use the borrowed money for any purpose you like.
- High loan amounts. Compared to other loan types, Peer-to-Peer loans come in higher amounts. If the personal loans don’t cover your needs, the P2P can get you approved for amounts as high as a couple thousand. Hence, be sure that the Peer-to-Peer loans will cover your needs.
- Online process. The P2P connects borrowers and lenders from different areas, gathered in a convenient online platform. This makes the process so smooth and straightforward. Whenever you need money, you can access the online platform and seal a deal.
- Excellent interest rates. Peer-to-Peer loans are a cheaper way to borrow money when compared to other financial institutions. Since there are so many individual lenders on the platform, they will compete against each other to gain more customers. For borrowers, this means lower interest rates.
- Suitable for poor credit score. If you are looking for an alternative to obtain a loan when having a bad credit score, turn to Peer-to-Peer loans. The lenders cater to borrowers with a less than stellar credit score, which can be a good solution for your financial troubles.
- No hard credit score inquiries. Applying for Peer-to-Peer loans won’t harm your current credit score.
How easy is it to acquire Peer-to-Peer loans?
The process of obtaining Peer-to-Peer loans starts with an online application. This provides the lenders with the needed info to check the credit score and assess the financial situation. Hence, this will determine the conditions under which you borrow, such as interest rate and terms. The platform will connect you with lenders that match your requirements and credit score. Unlike other financing methods, you can receive your funds within only two to three days after submission.
When it comes to the credit score, have in mind that you are usually required to have a minimum of 600. The higher your score is, the better conditions you will have for borrowing money, such as a lower interest rate. Some lenders will tolerate low scores, while others won’t. Therefore, individuals with a poor credit score will find it easier to get approved for Peer-to-Peer loans than other loan types.
What are the downsides of Peer-to-Peer loans?
As with other financing methods, Peer-to-Peer loans come with their downsides. Before you process to obtain a loan, make sure to check the cons and decide if they suit your needs.
- Credit checks. When submitting your application, the platform will assess your credit history. They perform credit checks to match you with suitable lenders. While the P2P platforms cater to individuals with poor credit scores, this doesn’t mean that you will always seal a deal. The P2P platforms are an open market, so expect to encounter lenders with different risk tolerance.
- No regulations. Peer-to-Peer loans were recently introduced to the financial market, meaning that there are no government regulations regarding this matter. Other types of loans have a government guarantee in case of default. With P2P, there are no clear laws that guide the subject, and things are riskier for both lender and borrower.
- There is space for scams. Since Peer-to-Peer loans aren’t regulated, this opens space for potential scammers. While you can quickly assess whether a bank or other financial instrument is trustworthy, you can’t do this with P2P lenders. This makes borrowers exposed to scams in the online market.