Peer to Peer Lending for Bad Credit

Are you in dire need of urgent capital to embark on a highly promising business endeavor, but all traditional banks and even the leading peer-to-peer lending platforms are not willing to offer you a loan because of your bad credit score?

Are you caught up in an endless infernal spiral of debt begging more debt and plunging you deeper and deeper into a financial abyss? Well, cheer up! All is not lost. There are peer to peer lending bad credit sites that offer hefty peer-to-peer loans for bad credit (in some cases, up to 35000 USD) even to small business owners or online sellers with very bad credit scores (in some cases, as low as 580).

Peer-to-peer lending is a method of financing without going through a bank. Peer-to-peer lending goes by several different names, including social lending, person-to-person lending, P2P lending—but they all essentially mean the same thing: An individual or group of individuals lends money to another individual.

The purpose of the loan could be anything, including college tuition, paying off high-interest credit cards or other loans—any purpose for which a traditional loan is sought out. The loan amounts vary from $1,000 up to $35,000 or more.

The benefit of this model for borrowers is a much lower interest rate—often less than ten percent. For investors, the benefit comes from the ability to base the investment on the information provided, choosing an amount with which he or she feels comfortable. Details on the benefits to borrower and investor are discussed later in this article.

Microfinance, while similar to Peer-to-peer lending in concept, is not the same in practice. Microfinance has been around since the mid-1800s, with a focus on helping poor individuals build an independent source of revenue. While this concept is more commonly associated with developing countries, a number of organizations in the United States provide microfinance services.

Usually run by non-profit organizations, the loans are generally very small, totaling less than $1,000. In addition, there are a number of criteria that need to be met, including establishing low-income and/or minority status, which may be different from the average person seeking a peer-to-peer or traditional loan.

A New Way to Borrow

Peer-to-peer lending remained popular, but the financial industry’s near-collapse in 2008 put P2P lending companies in the spotlight. Traditional banks found themselves in the hot seat for granting loans to high-risk borrowers, among a multitude of other things.

The federal government bailed them out, but the crisis was in no way over. Even while the country was reeling from the damage the banking industry helped to bring about, the banks themselves could not be counted on to help the nation get back on its feet. As quickly as they recovered, the banks increased interest rates and fees where they could, and refused loans to all but those with the highest credit scores.

While this was happening, the country had already been struggling with record-high unemployment rates and the steady decline of home values. The aftermath of the bank bailout was the proverbial straw that broke the camel’s back, launching the country further into the worst recession in recent memory.

Borrowers and cardholders watched helplessly as their credit card interest skyrocketed; credit limits were slashed; and mortgage and student loan refinancing were summarily denied. The majority of these people had a good history with their lenders.

They paid their bills on time, had good or better credit scores and did nothing to encourage such moves. This arbitrary move by the banks as a result of the bailout contributed greatly to the borrowing public’s building mistrust in any financial institution.

Enter peer-to-peer lending. For many borrowers, P2P lending has become the answer to the problem of obtaining a loan with a reasonable interest rate. For investors, it’s a way that they can help other people with their financial needs and earn a better return than many other types of investments. Below are overviews of the benefits and disadvantages of P2P lending from the perspective of both borrowers and investors.

Peer-to-Peer Lending for Borrowers

Borrower joins one of the P2P provider websites and fills out the loan application. The information required is essentially the same as if borrowing from a traditional lender: the amount needed to borrow, the purpose of the loan, credit history and income information.

Requirements for consideration:

• Age 18 or older
• Have a valid checking account
• Have social security number

Peer-to-peer lending is an interesting blend of traditional borrowing, investing, bidding sites and social networking. While there may be slight differences, the process goes something like this:

If the application is approved, the loan request is shown on the investors’ platform, where the investors will go over the details and decide how much money, if any, to put toward the loan. Many investors put a small amount toward a number of peer-to-peer loans, thereby diversifying their risk.

A note: Investors do not have access to personally identifying information. However, the borrower’s credit report and FICO score are part of the approval process to help investors determine whether to invest in the individual loan.

The amount of time it will take to fund the loan varies. Generally, there is a 14-day limit. If the loan is not funded in that time, the loan request may be removed from the investors’ platform.

During the waiting period, investors can ask questions of the borrower, which will help them in the decision-making process.

If the loan is funded, the money is dispersed to the borrower, minus a reasonable origination fee.

If the loan is not funded completely, the loan request may be removed from the platform. However, if the funding reaches a certain threshold of percentage to the total amount, the borrower may be offered the option to accept the lesser amount or withdraw the loan request.

Payment schedule for the loan varies, but ranges between one and five years. Check with the P2P provider to determine loan duration choices.

Suggestions for the New Borrower

Low credit scores may be allowed. Peer-to-peer providers require a minimum FICO score to gain a loan. If the borrower’s score is above 600, he or she may find a provider willing to help. However, borrowers should understand that the lower the FICO score, the higher the interest rate. The highest interest rates can exceed 30 percent, which may not be feasible for the borrower.

Full disclosure is encouraged. The borrower doesn’t need to go into the details of Fluffy’s surgery or other non-essential intricacies of the reason the money is needed. However, some P2P providers offer an open dialogue between borrower and investor, which can help the borrower further explain their need or circumstance.

Pay on time, every time. With P2P lending, the borrower is dealing with a group of individual investors, not a faceless bank. All the people who fund a borrower’s loan generally are not finance fat cats, but regular everyday people who want to help.

Pros and Cons for Borrowers

There are distinct advantages to the borrower. A lower interest rate for most borrowers is a reality. The lack of an intermediary, such as a bank, contributes greatly to the lower interest rate. If there are questions about credit issues or income, the borrower has the opportunity to explain his or her unique circumstances to the investor(s) directly, so the borrower has a better chance of obtaining a loan than from a faceless bank.

There is no prepayment penalty if the borrower wishes to pay off the loan before the end of the term. There are no hidden fees. The only other fee a borrower may encounter is a late payments fee if the payment is not made within 15 days past the due date.

As with all peer-to-peer loans, the borrower’s credit score contributes to the interest rate. The P2P provider will assign the application a grade based on the borrower’s credit score and other factors. The higher the risk is to the investor, the higher the interest rate will be for the borrower.

The borrower pays an origination or closing fee after his or her loan is funded, which depends on the overall grade of the loan. The fees may be less than one percent, up to five percent. This amount is taken off the loan amount, so borrowers should request slightly more than they need.

In this article, we will describe to you, the main features of a few of such online companies. First, let's briefly specify what it means to have a bad credit.

What is Bad Credit?

The rationale behind a bad credit is to help lenders avoid lending to people from whom they risk not getting all their money back, especially in case the loan is not secured. Based on your credit history, you are given a score that informs every potential lender on how safe it is for him/her to lend you money.

Your credit history depends on three factors, namely: the amount of money you currently owe, your current credit, and the timeliness with which you have been paying past debts.

These three factors are weighted differently when calculating your credit score, with the amount owed having the greatest weight. The least possible credit score is 300 and the highest is 850.

- Any score between 300 and 629 is considered bad credit by credit bureaus;

- between 630 and 689 is fair credit;

- between 690 and 719 is considered a good credit and 720 or more is excellent credit

Best Personal Loans For Bad Credit

Some of the peer lending sites that can offer you a loan even if you have a bad credit score are:

Bitbond

In Bitbond www.bitbond.com peer to peer lending for people with bad credit is available globally. You can do it from the comfort of your own home without ever leaving your chair because peer to peer platforms has implemented an innovative scoring mechanisms to more accurately assess your credit with which means that although they are less restrictive they make a more accurate assessment of your credit worthiness.

Bitbond is the perfect solution. Bitbond works on the Bitcoin network which means it’s available internationally. People with low credit score or without bank account now can have access to working capital. They do not need a bank account to get a loan. Because Bitbond uses Bitcoin as payment network they cutter the banks and as result, the fees are significantly lower than they would be with banks or other peer to peer lending platforms.

Peerform

Peerform's lending standards are far more moderate than those of the other major peer-to-peer credit operators, lending club and prosper. Here, you can borrow up to 25000 USD with a credit score as low as 600. However, you have no guarantee that your loan will be funded since most peer-to-peer lenders will be wary of lending money to peers with low credit scores.

All the same, you have the opportunity to explain to lenders why your score is so low and to convince them that you can repay the money at the appointed time. By doing so, you will greatly increase your chances of getting a loan with bad credit on Peerform. Note, however, that there are a number of fees to pay in the course of such transactions on Peerform.

Another advantage with Peerform is that they will clearly explain to you all that it entails and thus save you the embarrassment of having to pay fees that you were not expecting.

Badcreditloans.com

To be able to get a loan from badcreditloans.com with a low credit score, there are a number of conditions you must satisfy:

- you must be no less than 18 years old

- you must have both a valid email address and a valid phone number

- you must either show proof of citizenship or proof of legal residency

- you must show proof that you have been working for at least 90 days successively, and earn a monthly salary of at least 1000USD after all taxes have been deducted.

Once you have fulfilled all these conditions, the website offers you a platform to contact potential lenders and present your case to them. The advantage you have is that each of the potential lenders who are willing to lend money to you, will then tell you the terms of the loan, and you will be free to select the best.

However, there is no guarantee that there will be many such offers, and even if there are, there is no guarantee that any of them will really suit you. The interest rates charged here typically range from 230% per annum to 2300% per annum. While these figures look astronomical, they should not scare you because you will typically have to pay back in a matter of weeks. However, if you are unable to pay back on time, then those terrifying interest rates will ready get you into trouble.

Avant

Avant deals mainly with borrowers whose credit scores lie between 580 and 700. One key difference between Avant and other peer-to-peer credit companies is that the money lends to you does not come from individual lenders, but from the company itself. As such, you can always be sure that if you satisfy the conditions, there will be capital available to you. In fact, with Avant, it is even possible to have the loan money the day after you apply for it.

One other advantage with Avant is that you can borrow up to 35000 USD at a go, which is extremely bounteous on their part, considering that the borrower has a bad credit score. The negative side of it, is that if your score is below 580, you stand absolutely no chance of qualifying for a loan from Avant.

Netcredit

With Netcredit, even if your credit score is as low as 550, you can get an unsecured loan of up to 10000 USD. This is really impressive for a bad credit loan. NetCredit is another peer-to-peer lending company which gives you clear and precise information on every aspect of the loan transaction.

A disadvantage, though, is that the interest rates are generally terribly high, and so unless are entirely sure of being able to repay on time, you may be better advised to search for another solution. Also, NetCredit is relatively new, so if you are looking for proven reliability, you may want to look elsewhere.

Personalloans.com

With PersonalLoans.com, a multitude of lenders can solicit your company once you have filled out a straightforward application form. You will have the choice as to which lender to borrow from, based on their respective APR's. One advantage is that, even with a bad credit score, you can borrow up to 35000 USD. A disadvantage is that there is no way you can determine beforehand what the APR's and other conditions and fees are going to look like since these does not depend on the platform, but only on the lenders and you.

There are other bad credit loan peer-to-peer businesses such as onemain, KIVA and GreenNote.