When people have bad credit, it will be difficult for them to get a loan and if they do get it, it will require a high-interest rate which will be even more difficult to repay. This is why a peer to peer loan will do well for such people with a credit score that lie in the 600s range.
- Sometimes, if you apply for a personal loan at a local bank, you will not be able to get it despite a good credit history. This is mainly because of the restriction in providing loans to people over the past couple of years. This is why P2P loan lending companies will do a better job at providing you with the essential loan in a better manner. Running through the internet, they also have litter overhead and will be able to approve loans for people who have a low credit score of around 640.
- In some cases, if the bank does not have access to the information that they require, they deny the loan and inform them of bad credit. On the other hand, Peer to peer lending companies will be able to accurately judge if you need a loan and if you can repay it properly. They have the ability to gather information about the borrower from a stream of third-party websites and build the profile of the borrower. Depending on the success rates of the previous loans taken by them, their loan will be approved or denied.
- The best part about the P2P loans is the low-interest rates that they provide it at. In fact, the P2P loans can be as low as 6.8% which is remarkably low when compared with the payday loan which charges an interest of more than 60% to people with bad credit.
- Another important aspect about the P2P loan is that they are also willing to offer a larger loan amount, unlike the bank loans. In many cases, if the debt is too high such as medical bills and credit card balances, it will not be easy to pay it off with the loan that a bank provides. But a P2P company will be able to provide you with a high loan which is sufficient to help you get back on your feet.
- P2P gives quick access to the loan amount. In fact, most people who apply for P2P loans will be able to see it in their bank account within a period of 10 days from the loan approval. On the other hand, if you are opting for a loan at a local bank, it will involve a lot of paperwork and phone calls and might take weeks together before you get everything done and access the loan amount.
Having a bad credit is not a good sign of your financial situation. Rather than looking for bad credit loans one should look for ways to avoid getting a bad credit score, from the very beginning.