In the past the main route taken by consumers looking to borrow money has been through banks and other traditional financial institutions. However, over recent years more and more people have found it increasingly difficult to borrow money in the traditional way, with banks and financial institutions introducing stricter criteria and being far pickier about the people they lend to.
Some years ago, the only alternative for those unable to get finance via traditional routes would have been to go to doorstep lenders who charged extortionate rates of interest that became financially crippling or worse still go to illegal loan sharks who were prepared to go to almost any lengths to get back their money plus a shed load of interest on top.
These days, however, there is a new and revolutionary method of borrowing money without paying interest rates that are higher than you can afford, and this is known as peer-to-peer lending. There are a number of peer-to-peer lending sites in operation and these enable people that are struggling to get affordable finance from banks to benefit from an affordable and effective alternative.
If you want to try peer-to-peer lending you can go to one of these social lending sites, where many people are signed up as potential lenders who may be able to help you with your request for finance. All you need to do is state the amount that you need to borrow and the maximum rate of interest that you are willing to pay.
Once you have submitted these details the site matches you up with a number of individual potential peer-to-peer lenders or a group of lenders who may be willing to lend to you based on the terms you have specified. These lenders will still be able view your credit information and current debt levels, as they need to be able to make an informed decision with regards to whether to lend the money to you. However, if they decide to go ahead you could end up getting the finance that you need at a rate of interest that you can afford and without the hassle of having to go from one bank to another trying to get them to lend to you.
Once approved, the loan from the lender or lenders on the social lending site will be transferred to you and the site will handle your repayments on the loan as per the agreement with the lender.
The current financial climate has resulted in a rising interest in peer-to-peer lending, with more and more people realising that they do have an affordable alternative if they are unable to – or unwilling to – go through a traditional lender.
Jennifer writes a financial blog and works as a freelance business journalist. She loves writing prose and poetry but unfortunately spends most of her time having to write about mortgages and tax reduction.