Best Peer to Peer Loans in March 2022

By Tamika R. Gies On Mar 25, 2022

Final Verdict

There aren’t many peer-to-peer lenders offering personal loans and debt consolidation loans, but they may be worth considering. Through their P2P model, borrowers who may not qualify for loans from traditional lenders may have a better chance of being approved.

Happy Money is our pick for the best overall peer-to-peer lender due to its competitive interest rates and loan amounts available. However, if you are looking for more term options or need a higher loan amount, you will need to look elsewhere.

When purchasing a P2P loan, it’s a good idea to get quotes from multiple lenders so you can compare interest rates and terms. You can use our personal loan calculator to see how different interest rates and fees can affect your repayment costs.

Compare the best peer to peer loans

society	APR range	minimum credit rating	conditions	loan amounts	Maximum Loan Amount
lucky money Best overall price and best rates for borrowers	5.99% to 24.99%	550	24 to 60 months	$5,000 to $40,000	$40,000
peer form Best prices for investors	5.99% to 29.99%	600	36 or 60 months	$4,000 to $25,000	$25,000
upstart Best for large loans	3.09% to 35.99%	300	36 or 60 months	$1,000 to $50,000	$50,000

The APR is current at the time of publication.

Guide to Choosing the Best Peer to Peer Lending Sites

Why should you use peer-to-peer lending?

Peer-to-peer lenders are best suited for borrowers who may have trouble qualifying for loans from traditional banks and lenders. P2P lenders have looser borrower requirements, making you more likely to qualify for a loan.

They can also be good for borrowers who need to borrow money that aren’t eligible for other types of financing. For example, entrepreneurs starting small businesses are unlikely to be eligible for traditional business loans, so P2P loans can be a valuable alternative.

When deciding which type of loan is best for you, keep in mind that peer-to-peer loans may have higher than average interest rates and additional fees such as: B. Handling fees, which may increase your overall costs.

Comparison of peer to peer lenders

When comparing loan offers from peer-to-peer lenders or personal lenders, there are a number of factors to consider:

Effective interest rate: The APR is the total cost you pay to borrow money, including interest and fees. The higher the rate, the more you pay. The average APR for a 24-month loan as of November 2021 was 9.09%, but your interest rate will be determined by your credit rating, income, debt history and the loan term you choose.
Loan Conditions: The loan term indicates how long you have to repay the loan. Most personal loans have terms of five years or less. A shorter term will get you a higher monthly payment, but you’ll also likely get a lower interest rate and lower overall repayment costs.
Incorporation Fees: Some lenders charge a processing fee — but not all. The fee is a percentage of your loan amount; For example, a $1,000 loan with an 8% processing fee would add $80 to your loan cost (or it can be deducted from your loan proceeds).
Prepayment Penalty: Some lenders charge prepayment penalties if you repay your loan earlier than specified in the loan agreement. When comparing lenders, make sure there is no prepayment penalty to avoid these costs.
Minimum creditworthiness: The Minimum Credit Score is the score you need to qualify for a loan from a particular lender. In general, P2P lenders look for ratings in the fair to excellent range, meaning a rating of 580 or higher.
Security: If you don’t have perfect credit, some personal lenders offer secured loans. A property, such as a car, serves as collateral for the loan. Using collateral increases your chances of qualifying for a loan and securing a better interest rate.
Loan disbursement: While some lenders will disburse your loan the next business day after your application is approved, it may take several days (or longer) for other lenders. If you need the money fast, make sure you choose a lender that offers fast loan payouts.

How to apply for peer to peer lending

Most P2P lenders offer pre-qualification tools that allow you to verify your eligibility for a loan and view sample rates and repayment terms without affecting your credit score. If you decide to apply for a loan, you can usually fill it out online.

To apply for a personal loan, you must provide your personal information, including:

Your name
address
social security number
income
Employer Information

The lender reviews your application and performs a hard loan request. If approved, the P2P lender assigns you a risk category and submits your information to their investor platform. Its investors can review this information and make an offer to finance the loan.

Because lenders typically work with institutional investors such as banks and credit unions, this process is relatively quick and your loan can be funded and paid off within days.

frequently asked Questions

What is a peer to peer loan?

Initially, peer-to-peer lending connected borrowers and individual investors. A borrower could make a loan request and individuals could review those requests and decide to invest in them. Individual investors could pool their money to meet the loan rather than fund the full amount themselves, allowing them to spread out their investments and diversify their portfolios.

However, P2P platforms have moved away from this model. Today, most work with institutional investors, including banks and credit unions, rather than individual investors.

How does peer-to-peer lending work?

Peer-to-peer lending can be attractive to borrowers who may not qualify for loans from traditional lenders. P2P platforms assign you a risk category and a corresponding return to appeal to investors.

The loan information is submitted to an investment platform where investors can decide whether to fund your loan, and multiple investors can pool their money to fully fund the loan.

Is peer-to-peer lending safe?

Peer to peer lending is safe for borrowers. The platforms that offer P2P lending make it easy to exchange, and since most lenders work with institutional investors, your loan will be secured by banks or credit unions.

Are P2P lending the same as microloans?

Many people use the terms microcredit and P2P lending interchangeably. While they share similarities, P2P lending is typically for people looking for personal loans to consolidate debt or fund a purchase. In contrast, microcredits are typically small business loans for entrepreneurs who cannot find financing elsewhere.

Should I try P2P as an investor?

Peer-to-peer lending used to be a popular choice for individuals looking for alternative investment opportunities. Loans offered a higher return than some other investment options, such as B. Certificates of Deposit.

However, very few P2P lenders now work with individual investors. Lenders like LendingClub, Zopa and Peerform have stopped working with individual investors and are instead working with institutional investors like banks and credit unions.

There are only a few companies that offer private investors the opportunity to finance personal loans. Depending on the platform, returns can be as high as 13.97%. However, there is a significant risk as some borrowers may default on their loans and cause you to lose money.

How we selected the best P2P lending

Our team evaluated 38 lenders and collected 1,520 data points before making our top picks. We weighed more than 20 criteria and gave more weight to those with a greater impact on potential borrowers.

The top picks were chosen based on factors such as membership requirements (weighted at 15%), average fixed APR (weighted at 15%), and average origination fees (weighted at 10%).

We’ve also considered flexibility in repayment terms, helpful features like pre-qualification, and allowing a co-signer or joint applications to ensure borrowers have the best possible experience. For more information on our selection criteria and selection process, our full methodology is available.