Top 5 Peer-to-Peer (P2P) Lending Websites
Accessing loans from financial institutions is a rigorous process and requires various documents. This makes it challenging for many investors or lenders to access loans from banks and other financial bodies. However, those are not the only places you can borrow money. Peer-to-peer lending is the easiest and fast way you can get a loan. P2P doesn't involve any financial institution, and no strict measures apply.
All you need is to get willing individuals who will contribute money and lend it to you, unlike bank loans where you need to have a good credit score with P2P that doesn't apply.
Therefore, today we are going to inform you about five of the best peer-to-peer lending websites.
Continue reading to learn more.
What is Peer-to-Peer (P2P) Lending?
Maybe it is your first time to hear the term P2P lending. What does it mean? P2P lending brings borrowers and investors in one place. This allows you as the borrower to meet or communicate with the investor directly without any middle-man.
The best thing about peer-to-peer lending is that both parties win. The borrower receives the loan at a low-interest rate than when they could have borrowed from a financial institution. Additionally, the lender will reap high-interest rates than when they could have saved their cash.
This crowd-funding system has been in existence since 2005.
Best Peer-to-Peer Lending Websites?
In this section, we will give you an in-depth analysis of the best P2P lending websites.
Located in New York City, United States of America, Peerform tops our list of the best peer-to-peer lending website. It began its operation in 2010, and Mikael Rapaport, Elie Galam, and Meytal Benichou are the founders.
Out of all the five websites, we found out that Peerform has the best rates for both parties. Additionally, the minimum amount you can borrow is $4,000, while the highest is $25,000. Depending on the amount you borrow, you will have to pay the loan with three or five years.
The annual percentage rate when you receive a loan through Peerform is between 5.99% to 29.99%. Before you obtain a loan through this platform, you need to have a FICO score of more than 600.
During your loan application, Peerform will charge between 1% to 5% as an origination fee for loans to be paid in three years. For loans to be repaid in five years, the origination fee is 5%. If you fail to repay your loan within the required time, you will be charged 5% of the money not paid or $15. The best thing about Peerform is that you won't be charged a prepayment penalty fee.
Additionally, for you to qualify for a loan through Peerform, you need to have a debt-to-income ratio of not more than forty percent. When you receive a loan through this P2P lending website, you cannot use it for any educational purposes.
If you are a resident from North Dakota, West Virginia, Vermont, or Connecticut, you cannot borrow money on Peerform.
Do you have any issues with your credit score? Then Upstart doesn't strictly check your FICO score when applying for a P2P loan. Additionally, Upstart is unique due to the artificial intelligence feature.
This online lending website was formed in April 2012, and the headquarters are in San Mateo, California, United States of America. As of 2019, Upstart had a revenue of more than $160.2 million. This P2P lender has four hundred employees.
The founders of Upstart include;
· Paul Gu
· Dave Girouard
· Anna Counselman
The use of A.I. technology has enabled Upstart to evaluate borrowers' credibility using various aspects besides their FICO score. These aspects include employer, occupation, and education.
$1,000 is the least amount you can receive as a loan, while $50,000 is the highest loan amount. The maximum loan amount is high compared to other P2P lenders. Like Peerform, you should have a credit score of more than 600. The loan repayment period is between 3 or 5 years.
The annual percentage rate is between 8.41% to 35.99%. Upstart charges an origination fee of between 0% to 8%. If you delay paying your loans, you will be charged 5%. During your loan application, you must be 18 years old and above.
If you live in Iowa or West Virginia, you cannot get a P2P loan from Upstart.
Are you a small business enterprise looking for a loan? Then Funding Circle is the best peer-to-peer website that can help you secure a loan from an investor. This online lending marketplace was established in 2010 by Samir Desai (currently Chief Executive Officer), James Meekings, and Andrew Mullinger.
The headquarters of Funding Circle is in Queen Victoria Street, London, EC4. Unlike the previous two P2P lending websites that operate in one country. Funding Circle serves residents in the United States of America, the United Kingdom, Germany, and the Netherlands.
$25,000 is the minimum loan amount, whereas $500,000 is the maximum loan you can borrow. As a small business, the main requirement is that you should have a FICO score of more than 660. The loan repayment period is between 6 months to five years.
The annual percentage rate of Funding Circle is between 11.29% to 30.12%. When you receive the loan, Funding Circle will charge you an origination fee of 3.49% to 6.99%. If your application is successful, you will receive the amount within three days (maximum).
One important thing you should consider when applying is that you must have been in business for more than three years. Also, you should not have any record of a bankruptcy filing within the last seven years.
Small businesses from Nevada cannot apply for a loan through Funding Circle.
Lending Club is one of the oldest peer-to-peer lending websites. It was formed in 2006 and has its headquarters in 595 Market Street San Francisco, California, U.S. This P2P website doesn't give borrowers full loans but only fraction loans.
The least amount you can get is $1,000 while the highest is $40,000. You will have to pay the loan within 36 or 60 months after receiving the money. However, it would help if you had a credit score of more than 600 (this is not official).
The annual percentage rate by Lending Club is between 10.68% to 35.89%. The origination fee that they charge is between 2% to 6%. When you delay repaying your loan, you will be charged 5% of the amount to be repaid.
You must be a U.S. citizen and be 18 years and above. Additionally, you can apply for this loan if you live in the U.S. on a long-term visa.
Those from Iowa cannot apply for a P2P loan through Lending Club.
Prosper Marketplace Inc
The final peer-to-peer lending website on our guide today is Prosper. This online lending marketplace was established in 2005 in California, USA. Prosper Marketplace is best for individuals who have a better FICO score.
You can get a loan of between $2,000 to $40,000 that you will repay within 3 or 5 years. Prosper gives loans to borrowers with a credit score of more than 640. The annual percentage rate by Prosper is between 7.95% to 35.99%.
To qualify for a P2P loan from Prosper, you must have a debt-to-income ratio of not more than 50%.
Its origination fee is between 2.41% to 5%, and for late repayments, you are charged 5%. This loan is not accessible for individuals from Iowa and West Virginia.
What Can I Use a P2P Loan for?
A P2P loan is mostly an unsecured loan that you receive. This means that the lender will not ask you what you will use the money for. However, some require or restrict you on how to use the loan. For example, Peerform doesn't allow borrowers to use the funds for any educational purpose.
Others inform the borrowers not to use the cash to pay for gambling debts or purchase illegal goods.
However, most individuals borrow the money to pay for medical bills, pay for liabilities or consumer debts, and do home renovations.
Peer-to-Peer lending has become more popular and is being embraced by all countries. The best thing about this loan is that you can receive it even if you don't have collateral. Additionally, the application process is easy, unlike when applying for a loan via a financial institution.
This is all we had for you today. If you have any questions about P2P lending, please leave a comment, and we will help you out. Thank you for reading.