The amount you can borrow from the p2p lending platform usually ranges from $1,000 – $40,000. You have to post a thread on the p2p platform stating how much you would like to borrow. Investors will visit your thread and place a bid on how much they would like to fund a loan. The loan can get approved as long as you have 70% funded. As soon as it is approved, you will be able to receive the fund in your bank account within a period of 2 weeks.
As you know, p2p lending platform is different from traditional banks and lenders. They do not fund the loans based on their own capital. Rather, the loans are funded by individuals who have jointed the platform to lend money to people. These individual lenders make money from the interest rate and other fees charged on the borrower. They decide how much interest fee you have to pay.
Usually, when you apply for a loan on the p2p platform, the company will first perform a background check on you and then assign a grade. They will not reveal the grade to you. Only the investors will be able to see the grade. The grade shows whether you are someone who is responsible in financial management.
The interest rate that you pay will be based on the grade that you receive. The investor will take a look at your grade and decide whether they want to extend the loan to you. The advantage of taking out this type of loan is that it has a low interest rate starting from around 6% – 10%. Having an excellent credit score can help you to obtain the lowest interest rate for the personal loan.
Besides the interest rate, you also have to pay an origination fee. The origination fee may range from 1% – 6% of the loan amount and it will be deducted directly from the loan amount. Most p2p lending platforms have a minimum credit score requirement of 600 – 650. You can apply the loan as a joint application. In joint application, one applicant must meet the credit score requirement and the other applicants can have a lower credit score. The credit score of the other applicant must be not lower than 540.
P2P loans can be used for debt consolidation purpose. Some lenders can pay off your creditors directly so that you don’t have to submit the payment manually. Only a certain percentage of the loan can be used for debt consolidation. Prior to applying, you can fill in the loan request form at the official site to get pre-qualified first. Pre-qualifying for the loan will not cause your credit score to drop in anyway.