Please see information on Peer To Peer Lending Loans below.


Peer To Peer Lending Loans

What is a peer to peer loan?

A peer-to-peer loan, otherwise known as a marketplace loan, is effectively an unsecured personal loan that can be used by the borrower for any purpose. Unlike unsecured personal loans however, these loans are provided by individuals or investors, not banks, who are looking to get a good return on their money. Marketplace lender websites act like financial online matchmakers to connect borrowers with lenders.

Unlike a traditional bank loans or similar financial institution loans, these loans usually have a low interest rate and flexible repayment terms often with the ability to pay off a loan early with no fees applied.

A peer-to-peer loan must be applied for directly online you should note that a 'soft search' will be applied to your credit file when you make an application to get an APR quotation. This will not however, affect your credit history.

To obtain approval on a peer-to-peer loan you usually need:

  • To be a Canadian citizen or resident
  • To have reached the age of majority in the province where you reside
  • Have a valid account with a Canadian bank
  • Have a minimum credit history of 12 months

What are main benefits of a peer-to-peer loan?

The major benefit of a peer-to-peer loan is the low interest rates that are on offer. Because peer-to-peer lenders work solely online and are able to cut out the middle man, such as banks and building societies, they can pass on the savings to the borrower. Their lower operating costs mean that they are able to offer more competitive terms to borrowers than traditional banks or building societies who have large overheads.

P2p loans also offer more flexible repayment terms and the ability to repay the loan early at no extra cost. This is something to bear in mind if your circumstances change and you are able to pay off your debts to avoid paying interest over a long period of time.

Is there anything I should be wary of with a marketplace loan? Are there extra risks?

No, there are no extra risks with a peer-to peer loan. As with all financial products you must always ensure you check the terms and conditions before you commit yourself. Remember that with all loans, whether from a traditional bank or even payday lenders, if you miss a payment then you will face the same consequences and your credit history will be affected. One of the consequences, if this were to happen, is you will find it hard in the future to obtain approval on a loan, credit card, phone contract, mortgage or indeed any financial product.

Is there a chance that the peer-to-peer lender will request early repayment on the loan?

No - there is no risk that a loan will be recalled early. Peer-to-peer loans are at a fixed rate and usually lenders provide up to a 5 year term, with equal monthly repayments which will not go up or down and are not able to be recalled early by the lender.

There isn't a clear APR, what will determine the APR of my peer-to-peer loan?

The interest rate that will be offered to you on your peer-to-peer loan will vary between each individual borrower depending on your credit history and individual profile. In addition to your credit score, marketplace lenders take into account your income, access to credit and the amount of debt you currently hold. So, even if you have a less than perfect credit history, you may still find a lender who will lend their money to you you will no doubt just find that the interest rate will be a lot higher! Likewise, if you have a good credit score, you may find that you are not offered a loan for another reason.

How can I apply for a peer-to-peer loan?

Peer-to-peer loans are only offered online. That is not to say that they do not offer a good customer service online, via email and over the phone though. When you apply for a peer-to-peer loan the application is smooth and simple with you in control.


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