7 Ways to Use Peer to Peer Personal Loans for Any Reason

Debt and peer to peer personal loans get a bad name around the financial blogging community but they are really just financial tools. 

Peer to peer personal loans can be used for any reason but here are a few of the most common.

Advantages and Disadvantages of Peer to Peer Personal Loans

Peer lending is just like any loan. There are advantages to using it or any type of debt just as well as drawbacks. 

1. Peer lending is cheaper to originate than bank loans because there are no branch location costs. Some of these savings are passed through to borrowers in lower rates and some are passed to investors through higher return.

2. Peer loans are generally faster than bank loans and are more convenient. No more dressing up just to impress the loan officer.

Drawbacks to a Peer Loan

1. Rates on some p2p loans can get expensive. Since peer lenders loan to bad credit borrowers, they have to make up for higher default rates with higher interest rates. 

2. Some borrowers assume that because a peer to peer loan is online, it isn’t like a traditional loan and doesn’t affect their credit score like a bank loan. Missing a peer loan payment is just as bad as missing a credit card payment.  

How to use p2p loans for education

Since online peer loans are personal unsecured loans, you can use them for any purpose. You don’t need to put up collateral like your house for the loan. 

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