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Peer To Peer Lending – Does It Really Work For Borrowers


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This client is wondering what “peer to peer lending” is and does it really work for borrowers. They also want to know if peer to peer lending will work for them, what the process is and whether they will actually be advantageous for them compared to just borrowing money from their own local bank. We will try to address these questions, but first we will describe their situation and the loan application.

The client and his wife are both private school teachers and live in Phoenix Arizona. They have worked in this field for quite a few years and also managed their finances carefully over the years and it shows. There mortgage on their home has only another 8.5 years to run, they have no loans or credit card debt and they manage their finances in such a way that their retirement funds are also well invested. They are in an enviable position and many consumers would prefer their own finances to be in such good shape.

They have apparently decided to treat themselves to a new yard with an in ground pool, waterfall and slide along with landscaping front and back which will cost them approximately $50,000 to complete based on estimates they have received. This is the loan that they wish to take out and have applied at a number of locations. They have also been searching online for loans and came across peer to peer loans and wanted to know more about this type of loan.

Peer to peer lending is the process of lending money from one individual to another individual without going through a intermediary such as a bank or financial institution. A peer to peer loan can be arranged by an intermediary for a finders fee, however the actual loan is between the two unrelated people. In reality it is a private loan and is usually without collateral and it us usually unsecured. Interest rates can be higher as a result since they are considered to be more risky.

More discussion with the client will be needed about peer to peer loans before it can be determined if they are a good candidate for this type of loan.

DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION

Home/Mortgage Loan Amount :: $50,000

Home Loan Application and Processing Speed (when do you need the funds):: I need $50,000 to pay for some major renovations that we are planning for our home. This includes a new pool and landscaping around the entire home, front and back.

Do you currently have a mortgage? ::yes, with 8.5 years left on the payments

Bank Name and Branch :: Bank of America, E Washington St

What City/Town, State and County do you live in? :: Phoenix, Arizona

Zip :: 85004

What is your employment field? :: Teacher

Employment Position :: Private School Teacher

When are you paid? (monthly/weekly/biweekly):: Bi weekly

Your credit rating to be – excellent, fair, or bad? :: excellent

How did you find us? :: searching for loans online

How are you paid? (direct deposit/paper check):: direct deposit

Gross Amount Per Paycheck ::$3100

Do you agree to have this information published online, without your PRIVATE information of course? :: yes, no problem, however I would not want my students or their parents to know about this loan

Extra information here please (some detail):: We are looking for a loan of $50,000 to enable us to complete some major landscaping around our home. We intend to install an in ground pool with a water fall and slide along with some really nice landscaping around the large yard that we have. We also plan to landscape the front as well. We have had plans drawn up and initial estimates for all of the work that we have planned is around $50,000 for the entire project.

We have been searching for lenders that will provide us with the best deal in terms of interest rates, terms and fees and came across the term, “peer to peer lending” and were wondering does it really work, how does it work and are the rates etc competitive with what we might be able to find by applying for this home renovation loan at our local bank? Is this a safe loan to take and how difficult is it to find lenders that will lend on a peer to peer basis? We have lots of questions and would really like to sit down with someone to discuss this notion in more detail before we make a decision regarding who to give our business to.

Note to Lender :: Both my wife and I are teachers and we both work for a private school that provides schooling to families that can afford to send their children to a non public school. We have worked in this field for many years and have enjoyed quite good success in our chosen fields. our credit rating should be excellent because we have carefully managed our finances over the years. We each have a credit card and we have one car loan. Our home has only 8.5 years left on the mortgage and our we keep our credit card balances at zero. If we charge items to the credit card it is paid for by the due date on the statement.

We have substantial savings for our retirement, and do not want to touch these funds at this time. They are well invested and make a decent return which we do not want to jeopardize. Can you help us out in terms of understanding what peer to peer lending is and how it might help us with a loan of this type?

 

Category: Home Mortgage Loan APR 3% APR 5% APR 8%
Loan Principal $50,000 $50,000 $50,000
Payment Schedule Monthly Monthly Monthly
Length of Term 5 7 10
Amount to be paid $53,811.78 $58,852.91 $70,164.68
Total interest paid $3,811.78 $8,852.91 $20,164.68
Paid per installment $884.58 $691.03 $576.70
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One Response to “Peer To Peer Lending – Does It Really Work For Borrowers”

  1. 1
    larry Says:

    i am trying to get a small business loan of $10,000 I have a small garage i make between$4,500 & $5,000 a month but was sick the whole month of Dec.2013. i dont want to loose my business have been in here for 3yrs and need to get my rent %& shop bills pd . I would like to get a 5 yr loan if possble. I could handle paynents between $200.00 to $400.00 easily if someone would give me a chance..I don’t want to loose my business. I hope someone can help…. PLEASE & THANK YOU

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