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Depending on how much you owe, one of these fixed-interest, fixed-term loans could be a way to consolidate debts. For example, if you're laboring under $17,000 in credit card debts you're probably paying an average of 18% or even higher. If you were able to qualify for a loan through a lender such as Lending Club, you could pay off all those loans and be left with an interest rate of 12%, 8% or even better. This should result in a much lower monthly payment and because the loan has a fixed term, you would know exactly when you would be debt-free. Plus, these loans are unsecured, meaning they don't require you to offer up any sort of collateral. In comparison, if you were to get a homeowner's equity line of credit, this would also be a fixed-term loan but would require your house as collateral. In short, installment loans are baack and represent a much better way for many consumers to borrow money than high-interest credit cards.
Tips for getting a peer-to-peer loan
- Be realistic in what you ask for – most of the peer-to-peer sites display your credit score. Don’t ask for more than your score would warrant
- Pick the right venue – sites like Kickstarter can be great for creative professionals but if you need the money for personal or business reasons, choose Prosper or Lending Club
- Provide all the details you can - the people who loan through these websites want to know as much about you as possible. Be sure to include any information that would help a prospective lender see that you have the ability to make your payments
- Be sure to spell it out – let perspective lenders know exactly how you will use the money
- Promote your listing – if you have a listing where you are soliciting funds, share it with family members and friends. Don’t forget to use emails and social media to let the world to know about your request for funds. In other words, advertise it.
- Get recommendations – get as many recommendations as possible regarding your character. If you’re looking for money for your business try to get recommendations regarding your vision and business acumen.