How to Apply for Peer to Peer Lending in the UK

Social lending or Peer to Peer lenders have become very popular in countries such as the United Kingdom and the United States. This lending is organized through networks of individual investors, lenders and borrowers.

Many individuals in need of short term loans for personal or business use find these networks attractive. These lenders generally charge lower interest rates than traditional banks. Use these steps to apply for a Peer to Peer loan in the UK.

Difficulty: Moderate

Instructions

1. Identify the loan type and check if this is available through social lending networks. Peer to Peer loans available to individuals generally include: car loans, home improvement loans and debt consolidation loans. There are also peer to peer and venture capitalists social lenders especially for businesses.

2. Determine the peer to peer loan amount. Most social lenders only lend small amounts to individual borrowers in order to reduce lending risks. Individuals are advised to secure additional finances if a large amount of money is needed for a personal loan. Social lenders may provide larger sums for business start ups, business expansions and for secured loans.

3. Obtain your credit scores before applying for peer to peer loans. Each social lender has unique eligibility requirements and some are more conservative than others. Find out your credit scores and look for lenders that will accept them.

4. Identify peer to peer lenders in the UK. Find lenders suitable for your loan type, amount and credit scores. Search online for “peer to peer lenders”, “social lenders” and “P2P lending”. Evaluate each lender based on your loan criteria and on features such as interest rate and repayment terms. Submit a loan application for consideration.

5. Consider how you will repay the peer to peer loan. Calculate the monthly payments taking into account household and other personal expenses. Identify an alternative personal lender who can step in if you can’t repay the peer to peer loan. It’s important to repay peer to peer loans timely to avoid collection agencies. Peer to Peer lenders like traditional lenders are able to affect your credit scores in case of default or late payments.