There are various peer-to-peer lending apps in the USA. These apps allow users to borrow money from other users, with the promise that the loans will be repaid.
However, there are several factors to consider before borrowing money through a peer-to-peer lending app. First, make sure you understand the terms of the loan. Second, be aware of the risks associated with this type of investment.
How to find a peer-to-peer lender
Peer-to-peer (P2P) lending is a new phenomenon that emerged over the past decade. Online platforms allow P2P lenders to connect borrowers to individuals or institutions willing to lend them money. These loans can consolidate debt or finance large purchases, and they are often offered at lower interest rates than traditional bank loan loans.
It can be not very clear to find the right place to start if you are interested in P2P lending. There are several ways you can find the right peer-to-peer lender for your financial situation. Consider these things when evaluating lenders:
- Limitations on loan. What are the restrictions on how you can use the P2P loan?
- The loan amount. The amount you can borrow will vary from one lender to the next. Depending on your creditworthiness, it could be anywhere between $1,000 and $40,000. How much you can borrow will depend on your creditworthiness. You may need to look at a different marketplace if the minimum and maximum loan amounts are not appropriate for your needs.
- Qualification requirements. You can check the minimum credit score, income, and DTI ratio requirements for the marketplace. You can find out if you are eligible by prequalifying or researching the lender.
- Fees. Are there any origination, late or other fees charged by the marketplace? Although fees can increase borrowing costs, you may find a lender who limits them.
- The terms of loans. Different marketplaces offer different repayment terms. Usually, they range from three to six years. You will pay a lower monthly amount but incur higher interest costs with a longer-term. Look for lenders who don’t charge prepayment penalties if you believe you will pay off the loan quickly.
- Rates of interest. Peer-to-peer lenders may advertise a specific APR range. However, your creditworthiness will affect your rate. You may get a lower rate from one lender than the other, which could help you save money over the term of your loan.
List of 10 Best Peer-to-Peer Lending Apps in the USA
Below is a list of some peer-to-peer lending apps in the United States that offers quick loans to users.
1. Personal loans from Peerform
Peerform was founded in 2010 by a group of Wall Street professionals to provide low-cost personal loans to more borrowers. Peerform has the lowest operating costs and charges on any P2P lending platform, and it only requires 600 credit scores.
This provider may be the best choice if cost is your primary concern. It only offers personal loans of up to $4,000, half the amount offered by other P2P lenders. It can take up to a few days for your funds to reach you.
- It is not available in the following states: Connecticut, Hawaii, Idaho, Iowa, Maine, North Dakota, Vermont, Washington, West Virginia, and Wyoming.
- Fair credit OK
- APRs as low as 5.99%
- Chat live on the website
- Get loans starting at $4,000 and up to $25,000
- It takes a long time to get things done
- Very few customer reviews
2. Personal loans from Prosper
In 2005, Prosper was the first peer lender when it launched its US platform. It has higher rates than Peerform but offers more loan amounts. The 50% debt-to-income ratio (DTI) cap makes it ideal for debt consolidation. It can be costly for those who do not meet the minimum requirements. The higher interest rates are charged for lower credit scores than other P2P lending sites. It can take up to five days for your funds to reach you, and the origination fee is quite high, even when compared with other peer lending platforms.
- Not available in: Iowa, North Dakota, West Virginia
- Accepts DTI rates up to 50%
- Fair credit OK
- Preapproval is granted without a credit check
- Maximum APR of 35.99%
- Origination fee from 2.4% to 5.5%
- Turnaround time may take up to five business day
- To be eligible, you must have at minimum three credit accounts open.
3. Personal loans from LendingClub
LendingClub is the second P2P lender on the market. LendingClub offers many types of financing, including personal loans, car loans, refinance, and business loans. It charges origination fees and has higher starting interest rates than other peer-lending sites. This platform may offer a lower fee and rate if your credit is not perfect.
- Not available in: Idaho, Iowa
- Auto refinance at a low starting APR of 3.99%
- Welcome co-applicants
- High Trustpilot rating
- Turnaround time of up to 15 days
- Not available in all states
4. SoLo Funds is an alternative to a payday loan
SoLo Fund founder Travis Holloway created the platform as an inexpensive alternative to payday loans for people living paycheck-to-paycheck. In exchange for an optional tip, members of the SoLo Funds community can fund small loans of up to $500. You can get your funds in as little as one to two days after submitting a request.
It’s best to save the money for situations when you can repay the loan in a few weeks—for example, paying your electric bill to avoid high fees for restoring service. The terms are only good for 15 days, and you cannot roll them over. SoLo Funds will charge a late fee equal to 15% of the loan amount plus $5.
- Optional tip cap at 10%
- Lowest Loans
- A P2P platform requires a quick turnaround
- Bad credit OK
- Maximum term: Up to 15 Days
- Late fees are much higher than for other short-term loans
- It is difficult to qualify if you have a previous charge-off
5. Funding Circle business loans
Funding Circle is the only peer lending platform that specializes exclusively in business loans. Funding Circle was founded in 2010 and aims to provide more funding options for growing businesses as well as high returns to investors. Over 81,000 small businesses have been helped by investors who have invested $11.7 billion. The rates for business lenders start at 11.29%. Fair credit is possible. However, it does not offer loans below $5,000. This makes this an attractive option for large, one time expenses.
- 1.299% starting APR
- Lenders offering loans up to $500,000
- Accepts fair credit
- Starter Loans of up to $5,000
- Minimum of two years experience in the business
- High origination fees of 3.49% to 6.99%
6. Kiva Business Loans
Kiva is a non-profit microlender that specializes in funding startups and entrepreneurs. Kiva offers direct and peer-funded loans. Direct loans are free of interest, but you will need to crowdfund a portion through your social networks.
The peer-to-peer loans can be funded by $25 public investments. You can invest, but you won’t make any profit and may not get your entire investment back. Supporting a cause, you believe in is the main reward.
- Credit score not required
- Entrepreneurs have access to the following resources
- Options for P2P and direct transactions
- P2P loans are available with interest and can be used in lieu of direct loans
- Investors get no return
- Potentially lengthy turnaround
Upstart lets you diversify your loans across various risk profiles, and this reduces the risk that borrowers default on their loans.
Upstart is a great p2p lending platform that offers a quick application and high returns.
Upstart has a lower default rate than banks and offers a higher approval rate. This makes it one of the best places to invest in small business loans.
Upstart is rated 81+ by NPS, which means that Borrowers love Upstart. This rating is significantly higher than traditional banks, which average 30 or less.
The Key Features
- Upstart’s investment can be immediately put to use by anyone who is able to borrow money at any time and from any location.
- Upstart lets you diversify your loans across various risk profiles. This helps reduce the potential downside for borrowers who stop repaying their loans.
- You can safely access creditworthiness to lend money to borrowers. There is lower risk.
- To fully understand the operation of Upstart and to learn how you can benefit, request a demo.
Payment gives borrowers a boost to their FICO scores as soon as they pay off the loan balance. Credit scores can rise by as much as 40+ points, which allows borrowers to be approved for financial products and loans in other areas.
This is an excellent incentive to borrowers to pay off any outstanding loans, which results in happier investors.
Payoff provides borrowers with support specific to their individual circumstances, and it helps them repay their debts quicker and achieve the credit score they desire.
Borrowers can rest assured knowing that they are being looked after with their simple-to-use tools, online support, and live assistance whenever needed. Investors can also rely on them for their needs.
The member service team is available to help borrowers and investors with any questions.
The Key Features
- Their website is transparent and clear, with no hidden terms or conditions.
- A team of specialists is available to help borrowers plan their repayments with fixed monthly payments.
- Their website provides simple explanations that make it easy to follow and understand the complex loan process.
- Borrowers can access their rates online without having to affect their credit score. This makes it easier for them to get the loan process moving.
- Minimum 1-month loan term
- At the beginning of each month, interest is paid.
- Each month, one free withdrawal
BlockFi is another peer-to-peer crypto investment platform that allows you to earn interest for the storage of your crypto. With a target return rate of 8.6%, interest is paid monthly in Bitcoin, Ether, Litecoin, USD Coin and Gemini Dollar.
The minimum investment is $10, but investors don’t pay any fees. The minimum term for investment in one month, and this allows for slightly lower liquidity than many other platforms. After that, users can only withdraw one time per month without any fees.
- Secured loans or buy-back guarantees are available.
- There are no fees
- Flexible loan terms and USD withdrawals are free
You can invest in individuals and businesses around the world with MyConstant. The platform offers a variety of loan options. You can either get collateral or a buyback guarantee. This guarantees that the loan originator will purchase the loan back if the borrower defaults for more than 60 days to pay your principal and earn profit. Investors can also choose the loans that best suit their risk tolerance.
MyConstant offers three investment products: Flex (USD), cryptobacked, and crypto-lend. The APY earned 4%, 7%, or 9%, respectively. Daily interest is paid.
Is peer-to-peer lending legal in the USA?
Yes, peer to peer lending is legal in the United States. Many peer-to-peer loan apps can be used in the United States. These apps let individuals borrow and lend money to one another without having to go through a bank. Peer-to-peer lending does not have the same regulation as traditional banking.
The US government does not regulate peer-to-peer lending similarly as traditional banking. This could mean that there might be a greater risk than other types of lending. Peer-to-peer borrowing is a popular and cost-effective way to borrow money.
Peer to peer lending apps are a great option for those looking for a quick and easy way to get money. They’re also perfect for people who need a little extra cash but don’t want to take on any risks. If you’re interested in trying out one of these apps.
- I’m a firm believer that information is the key to financial freedom. On Coindecimal Blog, I write about personal finance and crypto.