Prosper.com – This easy-to-use site arranges unsecured loans between strangers. Users deposit money and choose from prospective borrowers. Borrowers write applications explaining why they are good candidates and can even upload photos to woo potential lenders. Prosper loans up to $25,000 per borrower and offers fixed monthly payments for a three-year term. They collect a 1-3% fee from the borrower when the loan is funded and charge lenders 1% annually.
Prosper Basics
Lending Type: peer-to-peer
Loan Terms: 3 years
Loan Limit: $25,000
Borrower Requirements: Flexible
Fees: 1-3% closing costs
Virgin Money – Use this site to formalize loans between friends and family members. They offer services for a variety of borrowing needs including student loans, real estate loans, business loans, and personal loans. Virgin Money’s peer-to-peer options can provide you with a promissory note, repayment schedules, security agreements, electronic deposits, escrow accounts, and more. Costs range from a simple $99 personal loan to a $2999 mortgage with closing and escrow expenses. A good choice for helping loved ones feel at ease.
Virgin Money Basics
Lending Type: family and friends
Loan Terms: variable
Loan Limit: variable
Borrower Requirements: open
Fees: $99 – $2999
Zopa – This unique program combines traditional lending and peer-to-peer lending. Prospective borrowers may apply for unsecured 5-year personal loans up to $25,000. The money is formally lent by one of Zopa’s credit union partners. Borrowers may then post profiles explaining why they need the loan and encouraging users to help them. Users help by purchasing federally-insured Zopa CDs (certificates of deposit) and setting the interest rates they want to receive on their investment. The lower the rate they choose, the more borrowers they are able to help. Each time a user selects a borrower, the borrower receives a portion of the user’s CD interest – reducing the effective interest rate he is charged. Prospective borrowers must meet strict qualifications such as a credit score above 640, an income of at least $2,000 a month, and several years of credit history. Zopa does not charge borrowers additional fees or closing costs.
Zopa Basics
Lending Type: traditional and peer-to-peer blend
Loan Terms: 5 years
Loan Limit: $25,000
Borrower Requirements: strict
Fees: interest charges only
Lending Club – This peer-to-peer system matches lenders to borrowers meeting high standards. Potential borrowers fill out an instant request and must meet qualifications such as a credit score over 640. After the request is submitted, a borrower is told what his interest rate will be based on his qualifications and the amount of the loan. The borrower can choose to accept the rate or can try requesting a different loan amount for a different rate. The loan request is available to users (lenders) for up to two weeks. Lenders may choose to select borrowers individually or they may purchase diversified portfolios based on their risk preferences. Lending Club charges borrowers a processing fee between .75% and 2%. Lenders are charged 1% of all borrower payments.
Lending Club Basics
Lending Type: peer-to-peer
Loan Terms: 3 years
Loan Limit: $25,000
Borrower Requirements: strict
Fees: .75-2% processing fee
New Peer-to-Peer Lenders Coming Soon
Peer-to-Peer lending is becoming a booming business. Look for these start-up business, expected to be issuing loans soon.