Everyone has moments in their life when they need a lump sum of money right away—when they don’t have the time to make a savings plan and wait until they’ve accumulated the needed funds. Borrowing money can be either a lengthy process full of paperwork, delays, and credit checks—or it can be fast and easy, like with credit cards and cash advances, but which also come with high interest rates.
And that’s if you can even get a traditional loan or credit line. In those circumstances, many people turn to personal loans from friends and families, but that’s also a way to potentially damage relationships. Or some desperate folks might head for a payday lender, which is a monumentally bad idea. But there’s another option that might work for you: Peer-to-peer (P2P) lending.
What it peer-to-peer lending?
Peer-to-peer lending involves borrowing money from one or more private investors instead of a bank or other organization. It’s a kind of crowd-funded personal loan—instead of borrowing, say, $5,000 from a bank, a payday lender or your uncle, you’re borrowing it from strangers. Usually this involves a platform like Prosper or Funding Circle, where investors choose the loans they want to fund.
Typically, loans are funded by several investors at once, but the borrower makes a single monthly payment that is then split among the funders. They make money from charging interest, and you get your short-term financial needs met without…
