P2P lending happens online so it’s important to understand all of your options and find a legitimate site that will protect your money before diving in. When using p2p lending services it is important to do your research first. Keep in mind these key tips when you’re looking through p2p sites for loans or potential borrowers.
1. You can find a site that has FDIC backing.
Many p2p sites out there use WebBank to handle their money flow. Based in Salt Lake City, it is an FDIC-insured bank that follows federal law regarding licensing issues. It also does some small financing projects like p2p lending. WebBank is partnered with Prosper.com and LendingClub.com, so if the idea of p2p lending makes you nervous, try a FDIC-backed site to ease your mind.
2. Not all sites offer the same kinds of loans.
Some of the sites out there for p2p lending are open to all kinds of loans while some are much more specific. To save time decide what type of loan you are looking for (personal loan, mortgage loan, business loan, student loan) before you start sniffing around the different sites.
3. P2P sites have different requirements.
Credit score requirements may limit your options when it comes to P2P lending sites. On Prosper.com you must have a FICO score of 520 whereas Lending Club requires a 640 or higher. Kiva.org is for lenders only. Restrictions like these are important to keep in mind in the beginning stages of your research.
4. Websites are constantly changing.
Loaning and borrowing money has inherent risks in it. While that shouldn’t turn you off automatically it is important to recognize your risk and go into this process with your eyes open. Websites are changing and their content changes. Also, make sure you are not on a scammer’s website, read Person-to-Person Lending: Top Lending Sites to see some of our recommended p2p lending sites.
Learn more about p2p lending: Alternative Loans, P2P Lending Made Easy