The market for unsecured credit is barely recognizable from what it once was. The days of queuing up outside the bank to fill out piles of paperwork are very much a thing of the past, with online lenders having infiltrated the industry and effectively transformed the landscape. Yet while these have brought some much needed competition and convenience to the sector, not all of these online platforms offer the most scrupulous of interest rates, meaning you need to keep your wits about you if a helping hand is what you need.
One of the standout varieties of platforms to offer personal loans are peer-to-peer lenders, which conduct their business by matching the funds from ordinary people who opt to lend their savings – rather than putting it into the bank – directly with those in need of credit. Such a streamlined process eliminates all intermediaries, and P2P platforms do not use any lender capital for personal gain.
Instead, the platform acts purely as a mediator, and ensures the proper controls are in place so that this direct relationship between lender and borrower functions smoothly. For this, it commands a small admin fee, but there remain significant benefits for the customer. As a borrower, here are four which standout:
Aside from the efficiency of the business model, these companies operate entirely online, meaning overheads are kept to a minimum. As a result, creditworthy candidates can expect to get loans with APRs starting from 5-6%. In addition, any fees are clearly visible on their websites, and, in general, very reasonable.
It really is as straightforward as completing an online form to get a personalised loan quote; one that takes just a couple of minutes to complete. If you’re then happy with the provisional quote, completing the application is just as quick. You may have to submit some bank statements while credit checks are performed, but other than that, there is no effort required.
Assessing your application usually takes just a solitary working day, and, if approved, you can expect the funds to arrive in your account overnight. That’s it!
Other than good value, this may be the best reason of the lot to choose a peer-to-peer lender. You get to choose to borrow an amount anywhere between £1,000 and £25,000, and also the period over which you would like to pay it back (1-5 years). It means you can structure a repayment plan that suits you, and what’s more, some platforms like Lending Works even give you the opportunity to make early settlements down the line at no extra cost.
Certainly, for those in need of credit, these are not bad times to be taking out a personal loan. Bank of England rates remain entrenched at record lows, and as the loans sector becomes increasingly diverse, it is the consumer who continues to benefit. So with such a favourable set of options at your disposal, it makes sense to explore credit providers of all shapes and sizes in order to find the best deal you can. But if it works out that after doing your research you are drawn to peer-to-peer lenders, don’t feel sceptical. Feel vindicated.