Lending money at a loan club – what to expectUncategorized
The Lending Firm is one of the first peer-to-peer lending services and continues to be a major player in the P2P market. Instead of borrowing money from a bank, you borrow from an “investor.”
Traditionally, these investors were individuals who have a little extra money, but P2P loans have evolved so that in some cases a bank or institutional investor will finance your loan.
Why use P2P credits?
P2P loans are just another option. They are often less expensive than loans from brick and mortar banks, and in some cases are easier to qualify for. The process is also simple – you can do anything online (which is true for many banks these days, but some still require paperwork).
As a wise consumer, you should look at all the options and go with the best. Be sure to include local credit unions in your search and other non-banking online lenders.
Credit Club Basics
Getting Credit: To get credit, you need to create a claim online. Assuming you are eligible for lending, your loan can be funded within a few days. In rare cases, investors need up to two weeks to finance their loan. If you do not get offers to complete 100% of your loan, you may be able to take a “partially funded” loan – which may be better than nothing.
Types of Loans: Loans can be used by almost anyone.
Business loans are available, but not for startups. Your business must be operational for at least two years. If you get personal credit, you can use the funds for anything you want – including your small business, healthcare, home improvements and more. There are, of course, some exceptions (you cannot use the money for illegal purposes, higher education and other limited purposes).
Eligibility: To be eligible for credit, you must be 18 years of age and a U.S. citizen, permanent resident, or on a long-term visa. As with most loans, you need income to repay the loan, and you may need to confirm that income (by providing documents such as W-2 forms or tax returns, or your Lending Firm may call your employer).
You will also need to link a US bank account to a Financing Credit Club. The credit club will also check your vouchers. You don’t need perfect credit, but borrowing is cheaper with good credit.
Logistics: You can borrow up to USD 40,000 for personal loans and USD 300,000 for business loans. Your credit will be repaid from your linked bank account with monthly payments (unless you pay by check, which costs USD 7.00 per payment and is not a good idea). Loans are due in three and five years, but you can pay early without any penalties. You are allowed to have two credits that are equal (you can generally apply for a second loan after making 12 payments for your first loan).
Credit Reporting: Your loans and payments are reported to credit bureaus. That’s good news if you pay on time, and bad news if you can’t pay. These loans can help you make a loan if you make payments every month, which will make it easier to get bigger loans (such as a home loan) in the future.
Security: You usually don’t have to pledge collateral to get approved. For loans in excess of USD 100,000, collateral may be required. This makes the process easy – less paperwork, and you (and the Lending Firm) don’t have to deal with filing and releasing liens or making personal guarantees.
Fees: As with any loan, you pay interest on the amount you borrow. You can reduce this cost by repaying the loan as quickly as possible – paying more than the minimum is a great way to save money. You will also pay an origination fee, which is 1% to 6% of your loan amount.
For example, if you borrow USD 2,000 and pay a 5% origination fee, the fee would be USD 100, and you would receive USD 1,900 in your bank account. Most borrowers will not qualify for the 1% fee (only borrowers with a large credit payment of 1%). Other fees apply if you pay late or pay by check.
Privacy: You won’t know who’s giving you money, and individual lenders won’t know who you are. Any communication or questions about your loan will go through the Lending Firm.
A credit club is generally a safe and legitimate way of lending
A credit club is generally a safe and legitimate way of lending, using industry standards. As always, make sure you are in a legitimate place before providing sensitive information, such as your social security number.
Shared applications: as of this writing, you can only log in on your own – you cannot log in together or use a cosigner. This means that you will need to qualify for a loan using your own credit scores, and you need sufficient income to repay the loan.