Peer-To-Peer Lending For Cash-Strapped Borrowers: Friend Or Foe?
When you need money quickly in order to avoid defaulting on existing debts, the question tends not to be whether to borrow more money but where to borrow it. Taking on new debts to keep existing ones from getting bigger, or worse, being sold to collection agencies, is a necessary evil from cash-strapped borrowers. This is one of the reasons that predatory lending has become so widespread. Payday loans and similar financial products get marketed to borrowers who have few other options because their low credit scores make it difficult to qualify for conventional loans from financial institutions. Peer-to-peer (P2P) lending has become an increasingly popular way for consumers to access credit that would not otherwise have been available to them. If you are considering borrowing from a P2P lender and want to know if there are other options, or if taking out P2P loans has made your debt problems worse, contact a Jupiter debt lawyer.
Random People on the Internet Will Be There for You When Institutions Will Not
P2P lending has become so popular because it enables people who would have difficulty getting approval for loans from banks and credit unions to borrow money quickly. Anyone who is willing to lend money on a P2P lending site may do so, and each lender decides individually how much risk they are willing to assume. Thus, the loan amount the lender approves, the interest rate, and the minimum qualifying credit score vary from one loan to the next, even on the same P2P site.
Besides the lower credit score thresholds for approval, another attractive feature of P2P loans is that the loan amounts offered tend to be smaller than the amounts of bank loans. To get a personal loan from a bank, you must be willing to borrow several thousand dollars and able to qualify for a loan of such size. If you just need $300 to tide you over until your paycheck comes in, P2P lending is a much more convenient option.
Are P2P Loans Just Another Debt Trap?
P2P loans may be fast, but they are not always cheap. The interest rates of P2P loans are at least as high as the interest rates of unsecured personal loans from banks. Likewise, the P2P sites may charge borrowers hefty fees before releasing the loan money. Worst of all, when borrowers fall behind on their payments when repaying P2P loans, the lenders are often quick to sell off the unpaid debts to collection agencies. Therefore, if your motivation for taking out a P2P loan is to keep up on your existing debt payments and avoid getting your debt sold to collection agencies, the strategy could easily backfire.
Talk to a Lawyer About Alternatives to P2P Loans
At best, P2P loans are a temporary solution to your debt problems, but to address the underlying issues, you need a debt lawyer. Your lawyer can help you settle your debts or file for bankruptcy protection, instead of just delaying the inevitable. Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.