If you need a loan and the traditional bank won’t approve you, a peer-to-peer loan may be a great option. P2P lenders offer flexible guidelines and fast funding, making it a great option for those that need funds right away or that want to sidestep a bank’s requirements.
How do you apply for peer-to-peer lending? The process is simple, check it out below.
Rules and Regulations
Before you choose platform, understand the rules and regulations. Each platform has its own rules regarding the reason they’ll lend you money, what qualifications you need, repayment requirements, and fees.
Read the platform’s fine print – it should be easy enough to find on their website since all platforms are online. Also, read reviews, see what others have to say to make sure the platform is a good fit for you.
After you complete an application, peer-to-peer lenders pull your credit. Based on your answers and your credit score, they may then ask for specific documents including:
- Last 2 paystubs
- W-2s for the last year or two
- Bank statements for the last 2 months
- Tax returns for the last year or two
Each platform differs and it also varies by borrower. For example, if you’re self-employed, you may have to provide your tax returns, but if you work for someone your last 2 paystubs may suffice. If the lender has questions about your income, expenses, or assets, they may also ask to see your bank statements.
What to Consider
When choosing a P2P platform, you should consider several factors:
- Eligibility requirements – Don’t waste your time applying if you know you don’t meet the requirements
- Loan terms – Do they offer terms you can afford? For example, do you need a 5-year repayment term or can you afford something shorter? Not all platforms offer long terms.
- Fees – Know the origination fees charged. You can find the average cost a platform charges or get a customized quote without damaging your credit if the platform offers a quote with just a soft credit pull.
- Reasons for the loan – Many platforms ask the reason you need the funds. If your reason is ‘different’ you may have to shop around to find a platform. The most common reasons for the loans are debt consolidation, paying for a vacation, and fixing up a home.
It’s okay to shop around and get quotes from several platforms. If you do, look for platforms that don’t do a hard credit pull until you choose their loan. You should be able to get pre-approved and receive quotes from lenders without hurting your credit while you make a decision.
Make your decision carefully when choosing a peer-to-peer platform. Remember, this is a loan just like you would get from a bank. It affects your credit and you must repay the amount you borrow in the term provided. If you have questions or are uncertain about something, make sure you get clarification to ensure that you choose the right loan before applying for P2P lending.