I can remember each and every time I have ever needed to take out a loan. My biggest (and first) loan was to fund four years of college. Midway through college, I took out a second loan to buy a new car. More recently, I took out a personal loan so I could afford to pay off personal debt from an unexpected surgery. In each of these situations, I used traditional funding avenues (credit unions, banks). But I wish I had known about websites like Prosper, Lending Club and Green Note!
If you need a loan—or wish to invest in loan funding—be sure to check out what these “social peer-to-peer lending” websites have to offer you. Each of these lending websites has earned kudos from professionals and rave reviews from users (borrowers and lenders alike).
Prosper represents the best of what is now being called "social lending"—as a borrower seeking a loan, Prosper allows you to state the loan terms you are seeking with a nationwide base of lenders, who can then compete for your loan business. If you have money to invest, you can also use Prosper to find loans to invest in.
- Website: https://www.prosper.com
- How it helps: All you do is create a free account and set the interest rate and loan terms you’re seeking. Banks then bid to win your business in what is now being called "peer-to peer-lending."
- Cost: Free to use—approved loans will incur a one-time 1-5% "origination fee" when the loan is funded.
- Endorsements: LendIt, CNBC, Fox News, The New York Times, The Wall Street Journal, The Economist, TechCrunch and many others.
- Interested in becoming a Prosper lender? Read this great KCL post and find out how to earn 9% return or higher!
Why choose Prosper?
Prosper is an ideal lending and borrowing resource if any of these three scenarios applies:
- As a borrower, you want to find a lower interest rate than what you’re being offered through other funding avenues.
- As a borrower, you don’t have enough credit history (or the right kind of credit history) to qualify for a loan using traditional funding avenues.
- As a lender, you’re seeking higher interest rates and a more diversified portfolio than other investing vehicles are offering.
2. Lending Club
Like Prosper, Lending Club is a social-based, peer-to-peer lending network that connects borrowers and lenders. The better your credit score is, the better the interest rates you can qualify for. Best of all, a Lending Club loan is typically funded quickly. You can also become a Lending Club investor.
- Website: https://www.lendingclub.com
- How it helps: As a borrower, your credit score impacts your interest rate (starting at just 6.78% for borrowers with great credit). You can take out a personal loan for as much as $35,000. As a lender, you get to choose which loans to fund.
- Cost: Lending Club takes 1% of the loan amount for administrative fees.
- Endorsements: Inc. (calls Lending Club "one of the 500 most innovative business models of 2014"), The Atlantic, TechCrunch, CNBC, Fast Company, Forbes, Entrepreneur, Business Week and many more.
Why choose Lending Club?
Lending Club is an ideal lending and borrowing resource for you if:
- As a borrower, you have at least a 660 or higher credit score and a solid credit history (14 years is the average for Lending Club borrowers).
- As a lender, you’re willing to build a diversified loan portfolio to spread risk in exchange for higher return on investment (which Lending Club's loan filter makes much easier).
3. Green Note
Green Note is yet another social peer-to-peer lending network, with a splash of Kickstarter thrown in for good measure. The focus of Green Note is student loans, and the goal is to help students with higher-education dreams to find the funding they need to go to college or graduate school. And if you decide to invest in a borrower's educational dreams, your money will go to a very worthy cause as it’s earning interest.
- Website: https://greennote.com
- How it helps: Money is exchanged via PayPal. There’s no cap on the amount you can receive and no contracts or renewals. Funds given and received are called "donations" and can be used for anything related to your education expenses.
- Cost: $20 (one-time setup fee).
- Endorsements: Forbes, U.S. News, Bargainist, The Christian Science Monitor, Fortune, Smart Money and others.
Why choose Green Note?
Green Note could be the perfect student loan funding resource for you if:
- As a borrower, your social network includes potential lenders who believe in your dreams (most Green Note loans are funded by individuals known to the borrower) and are comfortable funding your loan through their "pledge drive" system.
- As a borrower, if you need to borrow at least $1,000 or more (Green Note doesn’t fund smaller loans).
- As a borrower, if you need to build your credit score (borrowing through Green Note doesn’t factor in your credit score, but timely repayment can help you build a good credit score).
- As a lender, if you have a passion for helping students achieve their dreams through higher education.
- As a lender, if you’re willing and able to "pledge" (lend) at least $100 for every loan you help to fund.
BankRate is one of the hands-down, most-trusted resources today for all things financial. From knowing the right questions to ask before signing a loan agreement to gathering average interest rates and loan terms in specific categories, BankRate can help you gather enough data to make an informed decision.
- Website: http://www.bankrate.com
- How it helps: Research and compare rates and benefits on everything from bank accounts to credit cards, mortgage terms to auto loans, and much more.
- Endorsements: AAA, American Home Shield, American Express, The Wall Street Journal, The New York Times, USA Today, Bloomberg, PBS, MSNBC…and many more.