Best Peer-to-Peer Lending Platforms

Overview

If you are unable or unable to borrow money from a traditional bank or online lender, peer-to-peer (P2P) lending is a choice worth considering. P2P funding is not like other types of borrowing you might have obtained in the past. You are not borrowing from a bank, but from a person or group of people who can lend money to interested applicants. P2P lending websites bind borrowers directly to buyers, also known as lenders. Each website determines the prices and terms, often with investor input, and facilitates the transaction. There are numerous best peer-to-peer lending platforms out there in the public domain.

Peer-to-peer (P2P) lending has only been around since 2005, but the number of rival sites is still substantial. Although they both work in the same general manner, they differ significantly in terms of eligibility requirements, loan rates, numbers, and tenures, as well as their target clientele. 

What Exactly Is Peer-to-Peer Lending?

Peer-to-peer (P2P) lending, also known as “social” or “crowd” lending, is a form of borrowing that matches people or businesses wanting to lend money with people or businesses looking to borrow money. As an alternative to conventional lending, a financial technology firm develops an online marketplace that connects loan borrowers with investors directly.

Your cost and conditions, as well as whether you apply in the first place, are still determined by the same factors that all lenders use. Your credit score, credit history, and salary, for example, would all play a significant part in your willingness to apply for a P2P loan and the amount you pay for funding if you do.

To help you get started, we combed the best peer-to-peer lending platforms and identified the top five websites based on your specific financial condition.

1. Peerform

Founded in 2010, a group of Wall Street executives made Peerform. Rates as minimal as 5.99 percent are available to applicants with excellent credit, but the overall loan limit is just $25,000.

A Peerform loan may be suitable for borrowers who do not have much credit or do not have a high credit score at the moment. The low credit threshold and minimum credit score encourage those with bad or good credit to apply, even if cosigners and joint applications are not available. Because of the low-interest rates, even though you don’t have the highest credit, you do not have to pay exorbitant interest rates.

Nonetheless, the fees mount up. You could end up costing even more than the principal sum due to origination costs and fees charged to process a check. If you have someone offering to assist you, not getting a cosigner alternative may be detrimental.

If you have a good financial background and can demonstrate your creditworthiness, look for another way to borrow money.

As of April 4, 2021, access to Peerform’s Help Center on their webpage is no longer available, so your only choices for contacting customer support are the live chat widget on the web, sending an email, or calling.

Pros:

• Low-interest rates for borrowers with excellent credit.
• There are no prepayment fees.

Cons:

• The full loan amount is low.
• Loans are not valid in five counties.

2. Upstart

Created in 2012 by a group of ex-Google workers, Upstart financed over $7.8 billion in mortgage loans. With the slogan “You are more than your credit score,” the company claims that its underwriting program will help classify “future prime” borrowers focused, in part, on education and job records, even though those applicants have bad or limited credit right now. Borrowers who apply for a personal loan are to obtain financing ranging from $1,000 to $50,000.

If you have less-than-perfect collateral or need access to loan proceeds fast, Upstart’s loan platform is worth considering. Any borrowers can benefit from the option to take out a second loan through Upstart if they are qualifying.

Note that borrowers with outstanding or excellent ratings can be likely to get a better offer somewhere. Some personal loan companies can deliver lower interest rates, less fees, and greater loan amounts than Upstart.

Perhaps the best news is that Upstart makes it simple to equate the loan bid to those of other lenders. Simply complete the prequalification process on the Upstart website to discover your cost and see if the platform provides you with the right deal for your circumstances.

Pros:

• Education or work experience, not just credit, are being taken into account
• The overall lending balance is higher than that of many other P2P lenders.
• Rapid support

Cons:

• The overall APR is 35.99%.
• The origination charge can be as high as 8%.
• Co-signers are not permitted.

3. Prosper

Prosper, the first peer-to-peer lending marketplace in the United States paved the way in 2005. Since then, the firm has assisted over $770,000 borrowers in obtaining funding. Qualified borrowers will borrow up to $40,000, with interest rates beginning as low as 7.95 percent.

Prosper, as a peer-to-peer lending site, allows you to obtain a personal loan backed by investors. To apply, you must have a decent credit score but no long credit history. This is advantageous for investors who are new to lending and do not have a lot to their reputation. The opportunity to shift your due date to a day that suits well for your budget is also beneficial in ensuring that you never miss a bill.

However, Prosper might not be the right choice. The multiple fees can be a deterrent. Since there are no fees charged by other personal loan providers, Prosper’s origination, late, and inadequate funds fees will inflate the loan sum. You could save much more money if you use a loan that does not incur additional fees.

Since it is a peer-to-peer lending platform, it is possible that the loan funds would take longer to arrive. If you need money right now, other lenders can accept and deposit funds within a day or two.

Pros:

• The total origination cost is lower than that of certain other P2P lenders.
• The ability to adjust the due date of your monthly payments

Cons:

• Support is being provided slowly.
• At least three open credit accounts are needed.
• The overall APR is 35.99%.

4. Funding Circle

Funding Circle, established in 2010,  currently has 100,000 investors. The corporation has assisted 90,000 small entrepreneurs in obtaining capital to help them achieve their objectives. If your company has been in operation for more than three years and you have a FICO score of at least 660, a P2P small business loan from Funding Circle might be worth exploring.

The sum you will borrow ranges from $25,000 to $500,000. Its APR ranges from 11.29 percent to 30.12 percent. It charges origination fees ranging from 3.49 percent to 6.99 percent. Prepayment penalties are not imposed by Funding Circle. Late payment penalties are 5% of the missed payment levied after 10 days. They suggest a minimum credit score of 660 FICO, which is a personal score. You would also have been in operation for at least three years and have had no bankruptcy filings over the past seven years. They have repayment periods ranging from 6 months to 5 years, and you can receive funds in as little as 3 days.

Businesses based in Nevada, on the other hand, are not eligible. You must now be a registered participant able to deposit a minimum of $25,000 into your Funding Circle investment account. The platform’s historical annual returns for investors vary between 5% and 7%. An annual maintenance fee of 1% of loan repayments is charged to investors.

Pros: 

• Available to company owners with good personal credit.
• Quick access to funds

Cons:

• Only companies that have been in operation for more than three years are eligible.
• General partnerships subjected to a hard credit investigation.

5. Payoff

Payoff, established in 2005, provides loans with a small credit background, which is handy if you are applying for a loan on your own. Borrowers would have access to their FICO credit ratings as well as interest rates as low as 5.99 percent. Loans, however, are not valid in all nations.

If you have decent to excellent credit and can pay off high-interest credit card debt, Payoff might be a good idea. The firm has affordable APRs that provides the origination fee but do not incur any other fees. For the first year of the loan, it also offers constructive consumer service. Furthermore, borrowers can learn what rates they are eligible for without changing their credit score.

If you need a personal loan for a purpose other than debt consolidation (or if you live in one of the states where Payoff isn’t available), this lender isn’t for you. In addition, the high minimum loan amount ($5,000) may put some people off.

And if Payoff is a good match for you, you can still browse around for a personal loan before applying. If you have decent to excellent credit, you might be able to apply for a variety of other personal loan opportunities. The disparity in APRs and fees between lenders may have a significant effect on your bottom line.

Pros:

• FICO score entry given for free.
• There is no prepayment penalty.
• There is a prequalification process open.

Cons:

• Longer grant periods
• Not present in any state
• There are no joint applications.

What Is the Process of Peer-to-Peer Lending?

When you apply for a P2P loan, you can usually go through the following steps.

1. You fill out an online questionnaire and apply it. Typically, this move would require a credit inquiry, either soft or heavy.
2. Assigned in a risk category or grade by the lending network. Your credit score would affect the interest rate and conditions given to you. If pleased with a bid, you will accept it.
3. Your loan offer is being reviewed by investors. They will use information such as how you want to invest the money or whether lending money to you is a safety risk. Your story could increase your chances of obtaining funding. Lenders can make bids to win your company depending on how the P2P network is set up. Your loan offer, on the other hand, might get denied.
4. You agree to take the loan. If you approve an investor’s offer, you will check the terms and accept the loan. The deposited funds will be in your bank account the next day or within a week, depending on the network.
5. You pay every month. In general, P2P lenders report accounts to credit bureaus in the same way that conventional lenders do, so late payments can harm your credit score. Late payments can also result in late fees, increasing the total cost of borrowing.

Loans Made Available By Peer-to-Peer Lending

Personal loans and peer-to-peer loans will also come to use for much of the same reasons. Here are some of the loan forms available on common P2P Websites.

1. Personal Loans
2. Home Improvement Loans
3. Auto Loans
4. Student Loans
5. Medical Loans
6. Business Loans

Is Peer-to-Peer Lending a Good Fit?

A peer-to-peer loan could be a good choice for those who do not apply for traditional loans or who want to look at alternate lending options. Nonetheless, keep in mind that, considering the trendy fintech setup, the P2P lending process isn’t all that different from the conventional one: the most creditworthy borrowers would normally apply for the lowest rates and best conditions. Attempting to improve your credit can benefit you. Meanwhile, looking for the best P2P deal can help you save money.

Conclusion

This sums up five of the best peer-to-peer lending platforms in the public domain. The firms on this list have relatively low-interest rates, smaller costs, and adjustable borrowing volumes, at least for a peer-to-peer or lending network loan. They are commonly distributed in the United States and are available to applicants with a wide range of credit ratings.

We analyzed the market’s limited range of peer-to-peer lenders and lending sites, immediately excluding those that threatened small businesses. Then we picked the best ones based on their APRs which are the average as well as minimum and maximum, fees, available loan sizes, and repayment flexibility.