Every p2p platform has its own eligibility criteria for the borrowers, and their requirements can be harder than the traditional lenders. For example, minimum credit score requirements may be higher. In addition to your credit score, p2p platforms are also strict about your income, and some platforms also ask you to provide proof of your educational history and income. The interest rate that you will get highly depends on your credit score. If your credit score is high, you will pay a low-interest rate and vice versa. If you meet the eligibility criteria of a lender, you can get a loan at lower rates than conventional loans. Quick approval and access to cash make p2p loans a great alternative to traditional loans, and you can use them for debt consolidation and many other purposes.
How Can You Get A P2p Loan?
It is simple and easy to get a peer to peer loan. If you want to take out a loan, you have to choose a platform and make an online application. Applying for a p2p loan is a two-step process. The first step is based on your credit rating and providing all the necessary information to the lender. The number of p2p platforms in the UK has increased dramatically. Here are a few things that you should keep in mind.
- The first and most essential thing is to shop around and make price comparisons to find the best loan deal.
- Look at the bottom of your chosen p2p website’s home page. Read the fine print to get an overview of the loan amount, interest rate and other charges.
- All the p2p lenders do not operate in all the areas of the UK, so you must make sure that the platform you are choosing operates in your state.
- You should borrow an amount more than your requirements even if you qualify for a large amount. It is because you have to pay interest on the extra amount, and even low interest can be costly over time.
Once your application is approved, your lender will give you a quote that includes the loan amount, interest rate and loan terms. If you accept the loan offer, a peer to peer lending platform will carry out a hard inquiry on credit and ask you to provide proof of identity and income. It may take a few days to finalise the lending decision. Once you get approval, the funds will be transferred to your account within a few hours to two working days.
Peer to peer loans appear in your credit profile like other traditional loans. When you take out a loan, your credit score goes a bit down, but when you make repayments on time, it will bounce back.
Bottom Line
Peer to peer lending offers several benefits to the borrowers and investors; that is why it has become a great alternative to traditional lending. However, there are some risks associated with this type of borrowing and lending that you should keep in mind. P2p loans offer ease and flexibility to the borrowers. You can get a loan at a low-interest rate and use it for a number of reasons. On the other hand, investors can choose borrowers according to risk tolerance, invest through IFISA, set interest rates and make high returns through this type of lending.