Lending Club and Prosper.com Now Offer Online Unsecured Loans

Although the online lending community has been characterized by the same types of firms that offer high-interest payday loans, two companies hope to reduce the interest that you would normally pay to a bank for an unsecured loan. Both Prosper.com and Lending Club are offering loans that are capitalized by individual investors, rather than by banks, resulting in lower interest rates on unsecured loans for consumers.

These types of loans are considered to be signature loans. If you’re not familiar with the term signature loan, it simply means that you are taking out a loan and the only guarantee that the bank has that you will pay off the loan is your signature, making it a signature loan. Another name for a signature loan is an unsecured loan. These loans have slightly higher interest rates than secured loans, but do not require collateral and are still much better than what you would be paying on a credit card loan.

Often people that want to take out a small amount of money as a loan go through a finance company in their town, this can be a mistake. Depending on who you work with, the terms of your loan and the interest rate that you pay can vary dramatically. Instead, consider taking out a loan through a peer to peer lending website such as Prosper.com or Lending Club. From your perspective, the loan is just like taking out a loan from a bank of finance company, but at a much lower interest rate.

The money that’s lent to you from a peer to peer loan actually comes directly from individuals, rather than through an intermediary such as a bank or finance company. Since you’re borrowing money directly from other people, you can very often get a much better interest rate than you would from a bank or finance company.

Both Prosper.com and Lending Club offer loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out an unsecure online loan for any reason as long as you have a credit score of 660 or above.

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