Peer Lending can be a mutually beneficial investments from both the standpoint of the lender and the borrower. There are many classifications of peer lending ranging from friend-to-friend loans, family lending, as well as organized methods of orchestrating peer-to-peer lending solutions. Benefits of peer lending are that it can provide an above average income or cash flow stream compared to main stream investments, and terms/fees are completely negotiable. From the borrower side, benefits include easy access to money without the need for credit checks, bank statement reviews, and lower upfront loan costs.
Of course there are downsides to peer lending as well. Default rates are generally higher due to the eagerness of lenders wanting to achieve above average rates of return. Also, sometimes terms are worse than bank loans or mortgage loans in the aspect of pre-payments and/or fees. It all depends on how the loan agreement is structured.
There are a few popular peer-to-peer lending sights available on the internet today. The most popular two are Lending Club and Prosper. Both sites allow you to become either a lender or a borrower. Note that lenders are limited to specific states that have been approved. Advertised rates range from 6% up to 30% depending on the risk a lender is willing to take. The downside to these peer-to-peer lending sites is that they usually require a credit check, and adjust the rates based on credit score. Prosper.com works more along the lines of an ebay style site for loans. So the credit rating is not as critical for Prosper.com. Lending club rates are completely based on credit score, assets and background information you provide during the sign-up.
Other means of peer lending or private lending is simply to ask friends or family members for loans. There are sites (Virgin Lending) and documents that exist to make these peer loans more official instead of just taking your friend of family members verbal commitment to pay you back. These are the best loans to come by and can be structured to be very flexible depending on the needs of the person loaning the money and the borrower requirements.
Peer loans can be used for real estate purchases, credit card debug consolidation, home remodeling, home rehabbing, or simply to fund at dream vacation. Next time you are in the need of money, consider bypassing conventional bank and financial institution loans and consider Peer Lending.