Frequently Asked Questions – FAQ
- What is an unsecured personal loan?
An unsecured loan given based on your credit score and history in addition your permanent weekly or monthly income. No collateral required at all.
- How is an unsecured personal loan different from a secured loan?
Unsecured personal loan is provided considering your creditworthiness whereas secured loan is based on the collateral like assets, gold, home you provide to the lender or bank as security.
- Who is eligible for an unsecured personal loan?
- Those who are above 18 years old,
- Have a permanent source of income whether employee, self-employed, or benefits.
- Min credit score: 580 above
- Min monthly income: $2,000 above
- No previous bankruptcy.
- No bad credit history.
- Can able to submit documents like source of income, provide Driver’s license or state ID, employer’s details or
- business transaction, bank information.
- Are there any hidden fees?
Origination fee for new loans 1 to 5% of the total loan amount, depending on the size of the loan. The origination fee is included in your APR and subtracted from your total loan balance before you receive it.
Avoid late payments because P2P lending charge $15 for payments that bounce back and either 5% or $15 (whichever is greater) for payments that are more than 15 days late. If you want to pay with checks, there is another $15 fee for processing (clearly, online payments are the way to go)
- What is credit history?
It is your financial record of your past repayments of loans and credit card bills. 89% of the loan issued are for the borrowers with a credit score of min 580 and have monthly income min $2,000. Higher your score higher is your chances of getting personal loan with low APR.
- What is the minimum and maximum term of an unsecured personal loan?
Min term 6 months to max 6 years.
- How much can I borrow?
Personal loans range from $1,000 to $35,000. According to recent p2p lending site survey 70% borrowers use their unsecured personal loan to pay back their debts, credit card bills, and remaining 30% use for other purpose like vacation, wedding, home renovations, buy a new vehicle.
Loans are issued with fixed interest rates and payback in monthly installments.
- What is APR? How it is calculated?
Annual Percentage Rate (APR) which includes interest rates and other cost for a year. May include origination fee is between 1% to 5%. Origination fee will be deducted from loan proceeds.
APR will be based on your credit score at the time of submitting your application.
- Suppose you apply for a $4,000 loan for a 36 month terms.
- Loan amount: $4,000
- Estimated APR: 15% for Good Credit score; 690 to 719
- 1% origination fees: $40
- You will receive loan amount: $4,000-$40=$3960
- Monthly repayment:$138
- Total repayable amount will be: $4,968
Please note: Unsecured loan interest rate will be always higher then secured loan.
- How much money am I eligible for?
Depending on your credit score and income p2p lenders offers the loan amount plus APR plus terms.
- Why do p2p lending sites need personal information?
P2P lending sites will not spam you by phone calls or emails. They collect this information to get you the best quote from the registered lenders and quickly reply to you and confirm your loan.
Please note: Each state has different loan options and to make sure you get the best possible loan offer based on your location this information are indeed necessary.
- What is the difference between a fixed interest rate and floating interest rate?
A fixed interest rate will remain same thought out your loan term whereas floating interest rate may increase or decrease depending on the financial market.
- What are the factors I need to keep in mind while comparing loans from different p2p lending sites?
- Low or no fees,
- Higher loan limits
- Flexible terms
- Transparent and informative website.
- Secured website having https:// ‘S’ stands for secured.
- Reputation (find reviews)
- Fixed monthly repayment.
- Can I apply for an unsecured personal loan for my business purpose? What are the documents do I need to get an unsecured business loan?
Yes, you can get unsecured business loan from p2p lending up to $35,000
- Your personal and business information.
- Business plan
- Your personal and business credit report(Good business credit score is 80 and above)
if you are start up and don’t have business credit then check your personal credit score first.
- Income tax returns.
- Business financial statements. (For start ups, your source of income).
- Miscellaneous Contracts and Legal Documents like business licenses and registration, Articles of incorporation, Franchise agreements, leases etc.
- What are the documents required to apply for an unsecured personal loan online?
If you are an employee, then:
- Paystub, State or Driver’s license ID, 3 months bank statements.
If you are a self employed, then:
- Business information, State or Driver’s license ID, income tax returns, 3 months bank statements
- How long will it take for a p2p lender to contact me after I submit my application?
Most p2p lending site will contact you within an hour to max 2 hours via email and phone call.
- Do I need to contact the lender directly?
No, not until your receive the loan offer.
- How long will it take for the p2p lending to approve my loan?
Once you submit your online loan application. P2P lending site will send your loan request to all its registered p2p lenders. P2P lending site will get you the best offer mentioning the APR, term, and loan amount within few hours.
- How soon will I get my loan amount?
It depends. How soon you will submit your documents next business day you can receive your fund in your savings or checking account.
- Does the p2p lending or lender verify authenticity of the submitted documents and the details provided in my application?
- How do I repay my loan?
You can step up auto transfer from your account to lenders. It works just like PayPal or some other online services where you pay monthly recurring fees.
- Can I close my loan before my term ends?
Yes, you can. No prepayment penalty fee.
- Can the p2p lender , change interest rate whenever he/she chooses?
No, it will be fixed interest rate.
- How will the security and privacy of my data be ensured, Is it safe to apply online?
Yes, you can notice “https://” on each p2p lending sites. Where’s’ stands for “secured”. All data are safe and secured.
- What happens once I submit my application at a p2p lending site?
Your application will be reviewed and sent to all the registered p2p lenders. Best offer will be provided to you.
- Can I get unsecured loan for bad credit?
Yes, you can if you have min 580. But APR will be high above $30% to 36%.
- Does checking rate hurt my credit score?
Fortunately, some personal loan lenders let you check your interest rate before you apply and without hurting your credit.
- Can I ask for customize loan term?
Yes, you can get it.
- 36 month loan term- Faster payoff
- Loan amount: 4,000 APR: 14% Monthly payment: $137
- 60 month loan term- Lower payments
- Loan amount: 4,000 APR: 17% Monthly payment:$99
- Will debt consolidation loan help me to consolidate all my debts?
Of course, pay off your debts like a boss!!. If you know your numbers then it is easy to pay back all your creditors with one fixed rate debt consolidation loan.