How to Use Peer to Peer Lending
Evaluate lender websites., Opt for guaranteed loans., Consider the risk rating., Fund your loan.
Step-by-Step Guide
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Step 1: Evaluate lender websites.
Person-to-person lending sites have different criteria for a lender to establish a loan.
Some sites allow you to set the interest rate you want attached to your loan, but these loans are often not guaranteed.
Others set an interest rate for you that results in a lower overall profit for the lender. -
Step 2: Opt for guaranteed loans.
Choose a peer-to-peer loan website that guarantees your loan.
This means the loan is backed by a credit union or other financial institution and you'll get your money back, even if the borrower misses payments or defaults. , Each borrower will have a risk rating attached to his or her profile based on credit rating and estimated annual income.
Consider this risk against your potential earning from interest when you choose a borrower. , Place funds in the peer-to-peer lending account at the website you've chosen according to the site's specified process.
Document the borrower you've chosen as the recipient and stay in touch with the borrower to keep lines of communication open in case there is a problem with repayment. -
Step 3: Consider the risk rating.
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Step 4: Fund your loan.
Detailed Guide
Person-to-person lending sites have different criteria for a lender to establish a loan.
Some sites allow you to set the interest rate you want attached to your loan, but these loans are often not guaranteed.
Others set an interest rate for you that results in a lower overall profit for the lender.
Choose a peer-to-peer loan website that guarantees your loan.
This means the loan is backed by a credit union or other financial institution and you'll get your money back, even if the borrower misses payments or defaults. , Each borrower will have a risk rating attached to his or her profile based on credit rating and estimated annual income.
Consider this risk against your potential earning from interest when you choose a borrower. , Place funds in the peer-to-peer lending account at the website you've chosen according to the site's specified process.
Document the borrower you've chosen as the recipient and stay in touch with the borrower to keep lines of communication open in case there is a problem with repayment.
About the Author
Joshua Knight
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