P2P Lending Apps that help Streamline Borrowing Needs
Peer to Peer lending apps enables the lending of money through an online platform that easily connects prospective borrowers with prospective lenders. P2P lending is emerging as a popular option in the financial marketplace because of the lower interest rates and reduced operating costs. These platforms cater to personal as well as business loan requirements.
This market could be of great aid to majorly two segments of the society – students and small businesses which due to their nature of work cannot afford high interest rates or long winding borrowing formalities. Coming to other benefits, these platforms, being online, makes it more transparent and it gives the buyer and supplier a competitive environment and hence more bargaining power.
Here are a few lending apps that help streamline borrowing needs:
Founded in 2010, Peerform is a dedicated lending platform that aims to ease the process of obtaining personal loans and offering a choice of investment opportunities. While using Peerform, a minimum amount you can borrow is $4,000 and maximum amount is $25,000 with a fixed low rate of 5.99%. There is an origination fee ranging from 1%-5% involved when you get the loan. Peerform doesn’t charge prepayment penalties, but for late fees or for payment by cheques there are some charges involved. Minimum recommended credit score to avail the loan is 600 FICO score. For investors – they can choose between two different types of products with Peerform: Whole loans for institutional investors or fractional loans for individuals. You can also customize the investment mix to get as diverse a portfolio as possible.
Founded in 2007, Lending Club is a very popular name in P2P lending market. Similar to Peerform, LendingClub provides lending as well as investment options. However when it comes to the borrowing amount, the minimum range is $1000 and the maximum is $40000 at an annual percentage rate of charge (APR) ranging between 10.68%–35.89%. The origination fee range is from 2% to 6%. There are no charges for pre-payment of loan however there are for late fees. The loans offered are of 4 types – personal loans, business loans, auto refinancing, and patient solutions. Looking at the investment aspect – you can invest as little as $25 but a minimum amount of $1000 is required across a variety of risk profiles. For those who don’t want to manually select loans, can pick a platform mix or a custom mix to make them diverse.
Founded in 2012, Upstart is a renowned AI powered lending platform that provides Peer to Peer loans. Upstart also developed an instinctive program for banks and financial institutions that is a unique attribute that separates it from others in its risk assessment style. Normally the creditors look at the FICO score, Upstart has created a system that uses AI/ML to assess the risk of the borrower. The software helps them identify the prospective borrowers based on factors like their education and employment history, even if those applicants have limited credit at that moment. Other than that, the minimum amount you can borrow is $1000 and maximum is $50,000. Origination fee ranges from 0%-8%. Recommended FICO score 620. For those willing to invest, can set up a self-directed IRA using the investments from peer-to-peer lending. This is a unique feature that many investors can be attracted to.
Prosper Marketplace Inc.
Founded in 2005, Prosper was the first peer-to-peer lending marketplace in the US. With Prosper you can get a minimum loan of $2000 and maximum of $40,000. The APR ranges from 7.95% to 35.99%. The origination fee stretches from 2.41% to 5% which is lower from others. Another pro is the flexibility to change your monthly payment due date and there is no pre-payment fee involved. However there are late fees penalties or a charge involved if you pay by cheque. For investors – There are seven distinct risk categories of loans to select from with their own calculated returns and level of risk that the investor can choose from depending on their risk appetite.
Funding Circle was founded in 2010 and has 100,000 investors and counting! Some of the pros of using FundingCircle is that it is also open to business owners and it just takes as less as three days to give you access to required funds. But the catch is it only gives loans to businesses that are more than three years old and should have no bankruptcy filings within the last seven years. The borrowing amount ranges from $25000 to $ 500,000. The APR range is $11.29% to 30.12%. Similar to other lending firms, FundingCircle does not charge any pre-payment fees but it does have a penalty for late payments. For the investors – You must be an accredited investor willing to deposit a minimum of $25,000 to your investment account with Funding Circle. The annual return for investors varies from 5% to 7%. Investors have to pay 1% of loan repayments in an annual servicing fee.
LendingTree is a third party service that takes a borrower’s important information, eg. FICO score by making the borrower submit a form and shares that information with multiple financial institutions, who then contact the borrower. This online platform helps consumers compare various financial products and services in one place. It offers several kinds of loans like Mortgage loans, Personal loans, Students Loans, Auto Loans, and Business Loans. The financial services offered other than loans are Bank accounts, Credit cards, and other financial assistance. Minimum and maximum loan amount ranges from $1,000 to $35,000. The APR range – 7.99% to 35.97%.
Founded in 2005, Kiva is a San-Francisco-based non-profit organization that is widely recognized across the globe for helping people fund their business at no-interest. The company facilitates microloans up to $10,000 with no interest. As a process you have to first fill out an application and get qualified, you have two options, first being you can invite your friends or family to lend to you and the second option includes making your loan visible to the public, tell them why you need the money, Eg. whether for a small business or to pay education fees, and then the people viewing your requirements can contribute until your loan is completely funded. The lenders have an option to choose which causes they want to fund and all the operating expenses are taken care by Kiva through voluntary donations by lenders and supporters across the world.
Founded in 2012, Avant is a privately owned Chicago based online lending offers real quick funding for P2P loans at competitive interest rates, by quick we mean as fast as the next day. The company uses a patented software to ascertain the creditworthiness of the customers for unsecured personal loans and credit cards. The borrowing amount for personal loans ranges from $2000 to $35,000. The APR ranges from 9.95% to 35.99%. It also offers credit cards with credit limits ranging from $300 to $1,000. The company has helped more than 800,000 customers till date.
Founded in 2005, Payoff offers loans with a limited credit history and with APR rates as low as 5.99%. Some of its key features are it offers free FICO score access, no pre-payment penalty, prequalification option is available. The borrowing range offered is $5000 to $35,000. The origination fee ranges from 0%-5%, which is lower than others. The minimum FICO score requirement to avail the loan is 640. Talking about drawbacks – it takes 3-6 working days to give access to the funds a lot more time than others in its sector. Payoff is also restricted in Massachusetts, Mississippi, Nebraska, Nevada, or West Virginia means hence making it unavailable nationwide.
Founded in 2005, Zopa was the world’s first P2P company and also a digital bank regulated by Financial Conduct Authority (FCA). Zopa offers lending, borrowing, savings, and other financial services and serves the customers in the UK. The borrowing amount ranges between £1,000 and £25,000. Zopa offers several APRs (annual percentage rates) ranging between 8.7% and 17%. In comparison to many others, Zopa pays a non-refundable origination fee and the amount depends on factors such as the duration and term of the loan. Talking about getting access to the money takes at least 5 working days once the amount is approved, which again is longer than others. Zopa achieved a new milestone in 2020 by officially launching Zopa Bank alongside their P2P business to offer even more ways to empower its customers.