If you are looking to get a peer-to-peer loan to pay for a major purchase or to consolidate debt, you have a number of options available to you including peer-to-peer loans, unsecured loans from banks, and other online personal loans. When shopping for a peer-to-peer loan, you want to make sure that you pay the lowest origination fee and interest rate to make sure that more of your money goes to repay the principal of your loan.
Many consumers are increasingly turning to borrowing money from other individuals by way of peer-to-peer loans from Lending Club or from the Prosper Marketplace. With Lending Club, you can get unsecured personal loans in amounts of $1,000 to $25,000. The term for Lending Club loans is 3 years and you will pay an interest rate of 7%-20% depending on your credit score. Most borrowers pay a 1.25% origination fee, but some lower credit borrowers have to pay up to a 4.50% origination fee.
If you were to get an online personal loan from Wells Fargo, you would pay between 10% and 25% APR and have to pay an origination of up to $100.00. Wells Fargo offers repayment terms between 12 and 60 months. The amount that you can borrow ranges between $3,000 and $100,000.
Another option that you have is using your existing lines of credit from your credit card, but that’s almost never a good option unless you don’t have any other credit available to you. Most credit cards are now charging consumers a 20% annual percentage rate or higher. Credit cards typically do not have an origination fee, but since the interest rate is typically much higher than a fixed-term unsecured loan, they aren’t a good option.
In terms of the best interest rate that you will get, getting loans from Lending Club or Prosper Marketplace will generally be a bit better than what you could get from Citigroup or Wells Fargo and much lower than what you would be paying on a credit card, however this can vary depending on your credit situation.
Getting a peer-to-peer loan from Prosper Marketplace or Lending Club is an excellent option and is just as safe as getting a loan from a major bank. The only caveat to that is if you would need a loan term greater than that of 3 years. All online personal loans that Lending Club and Prosper Marketplace originate are 3 years. Wells Fargo and Citigroup both offer 5 year terms.
