Turned Down By Banks, Try Peer-to-Peer Lending

Posted by Garrison Galbraithe

March 23, 2009

by Garrison Galbraithe

Borrowing money during difficult economic times can be trying. Banks do not want to give people money for fear that they will not be able to repay their loans. For people or small businesses that have a good credit history, this can be very frustrating. You may need some extra money to for a special occasion, or perhaps your business may be in a growth mode and you want to open an additional location. If the banks are unwilling to loan you money, where are you going to get the money that you need, right now?

If you are having a difficult time securing a loan through a bank or other lending institution, you might want to consider peer-to-peer lending. Peer-to-peer lending sites are a relatively new form of lending. There are several of these social lending networks. At these websites, you place a request to borrow money, and provided that your credit score is adequate, you will be able to borrow money from people or other small businesses, just like you.

What makes these social lending sites worthwhile? There are several many reasons why you would want to borrow money from a peer-to-peer lending website. One of the main reasons that you would want to use a social lending site is that you are more likely to have your loan funded. This is obviously the most important reason. If you cannot borrow money, regardless of the lending terms, you will not have the money that you need. The terms at social lending sites are usually more favorable than from banks. Thus, you can borrow money for lower interest rates and the repayment period may be longer, which lowers your monthly payment even further.

Social lending sites are somewhat strict about who they invite to their lending party. These sites will only allow people with good credit scores to request loans. By good credit scores they mean that you need to have a credit score of at least 640. Usually, you do not need to know what your credit score is. When you fill out your application at these websites, they will let you know if you meet their minimum requirements and qualify for a loan. You can find out your credit score by yourself by going to one of the many credit reporting sites which link up with the credit reporting agencies. Credit scores range from a low of 300 to a high of 850.

If you have a good credit score, you can apply for a peer-to-peer loan through one of the several social lending sites. In the United States, some of the more noted social lending sites are Lending Club, Zopa, and Prosper. Zopa is also available to residents of the United Kingdom.

If you are having a tough time securing financing through a bank, peer-to-peer lending websites are a great alternative. There are more and more of these sites starting up everyday. Check the internet for reviews. Using these sites offers you a greater chance of getting a loan, and at more favorable terms.

About the Author:

Garrison Galbraithe, who has been passionate about personal finances for more than three decades, has written a practical guide to peer-to-peer lenders. You can obtain information about several borrowing options, including how to get a signature loan at his site.

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Turned Down By Banks, Try Peer-to-Peer Lending

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