Can’t Get a Loan? Here’s Some Help

These days getting a loan is much tougher than in the “good old days”  before September 2007. In fact, if you are self-employed, it’s very difficult. Or, if you are an investor, it’s next to impossible unless you have already made a bundle and can put 40% down on that bargain you spotted driving around your neighborhood or scrutinizing the repo lists.

From adversity comes opportunity as the saying goes. From the Great Crash of 2007 is springing an entire new industry–peer-to-peer lending where individuals can borrow at better rates and less paperwork from other individuals who are able to make much better-than normal rates on any spare cash they may have.

What do you do if you want to jump on a great deal but don’t have the cash readily available?  Enter peer-to-peer or personal lending. Essentially, this type of lending is for any money need, not just real estate.  It’s become popular partly because of that ubiquitous Internet which is putting people together in  hitherto unimaginable ways.

peer to peer

Let’s say your daughter wants to buy a condo, and you want to lend her the money, but want to make it business-like. Go to Virgin Money . Yes, this is the same Richard Branson company with the airline and the record stores. This company specializes in loans among family members or at least among people who already know each other, so-called social loans. That is, it facilitates the process and puts everything on a business-like footing by supplying loan documents, processing, and third-party collecting.  The company also does small business loans and this year added wholesale mortgage loans.  This way, you can set up the loan to your daughter as though you were a regular bank and expect repayment in the same way. Fees vary from $99 to $2000 depending on complexity.

Then, if you prefer to borrow from strangers or have no relatives with extra cash, you can always go to Prosper where you can get a loan based on your credit score for up to $25000 to pay for school, credit card debt or whatever else you may need the money for. Don’t worry about privacy. If you are a borrower, your identity is not revealed so no potential lender will  contact you personally or even know who you are. And, once lenders have committed, they are not allowed to back out, so borrowers have some security.

Another site worth considering is Lending Club. This peer-to-peer site purports to  offer investors higher returns and borrowers lower-cost loans through its online financial network eliminating the high cost of traditional banks.

Borrowers with good credit can get 3-year-term personal loans from $1,000 to $25,000 at fixed rates that are often significantly better than rates from conventional sources. Investors can an earn higher returns: the average net annualized return has been over 9.5% since 2007. Money invested goes to the Lending Club borrowers chosen by the individual investors who generally spread their investment across tens or hundreds of qualified borrowers.

These are just a few of the many sites which are doing these kinds of loans. To find more, check out this video

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