Peer to peer lending sites allow everyday people such as you or I to borrow money from investors. They give potential borrowers the opportunity to find other individuals who are willing to lend them money, oftentimes at interest rates that are lower than those on a traditional bank loan, credit card, or payday loan.
Loans may be used for any purpose, including to pay off credit cards, start a business, or make home improvements. I’ve heard of many people that use peer to peer loans to consolidate other debt into a lower rate loan. For example, if you are paying 15% interest on credit card debt but could obtain a peer to peer loan that charges you only 8%, using the peer to peer loan could be a great move.
If you need a consumer loan, I personally don’t see any downside to looking into a peer to peer loan—either you are offered better terms (i.e. lower interest rate and fees) than you are elsewhere and so you take out the loan or you aren’t and so you go elsewhere for the loan.
Peer to peer loans oftentimes offer some of the best borrowing deals around and so are an important option for borrowers to keep in mind.
For additional peer to peer loan information, see our peer to peer loan articles in the Personal Finance section of the site.