Social lending, also known as peer to peer, or person to person lending, is fast becoming a far more popular model of borrowing than from high street banks. The idea behind matching borrowers with lenders is simple and efficient, enabling lenders to charge fairer rates of interest for borrowers and lenders alike.
Short term lending has plugged a gap for those who need emergency cash in a hurry, but many short term lenders have attracted a reputation for irresponsible lending and very high interest rates. Peer to peer short term loans however, provide all the benefits of short term loans, without the same types of cost. Being part of a community of borrowers and lenders, also makes peer to peer lending a far friendlier experience than dealing with a faceless organisation.
Peer to peer lenders are more committed to responsible lending, and so will always make credit checks on potential applicants. This also protects investors. However, short term peer to peer lenders consider individual applications carefully, and are more likely to be sympathetic to those with poor credit.
So if you’re thinking of taking out a peer to peer short term loan, here are a few of the main questions you need to ask, to ensure you get the best loan.
- How much does the loan cost?
- Is the lender transparent about the cost of the loan?
- Are there any hidden charges or fees?
- What is the lender’s policy if you cannot repay?
- Are you able to choose the date you want to repay the loan?