Person-To-Person Loans Advice
If you want to try out a new type of loan, then look no further than a person-to-person loan. These loans are becoming increasingly popular, and are a change from the traditional type of loan. If you want to know more about these unique financial products, then here is some advice about person-to-person lending.
What is a person-to-person loan?
A person-to-person loan is a loan that bypasses the normal system of banks or traditional lending institutions. However, this is not just a handout from friends or family, but rather a legal contract between people who want to borrow and invest. This new type of loan runs much like a betting exchange, in that people go onto web sites and seek loans, whilst others seek investment in people.
Why has this come about?
This type of product has come about due to the inflexibility and expense of traditional loans. Many people want an alternative to the traditional loan, and this type of loan gives them that opportunity.
What are the advantages?
The advantages of such a system are that people can find a loan that they might not normally be able to get hold of, and at a more competitive rate. As long as someone is willing to lend you the money, then you can get hold of that loan. Also, it allows you to lend money to other people, and possibly make money from this.
The risks involved
Obviously, there are risks involved in this process, especially if you are offering a loan. As for any other lender, there is no guarantee that the person will repay the loan. However, there are methods in place on most person-to-person web sites to make sure that penalty fees and money is collected should payments be late. However, all loans are unsecured so there is no security if the person defaults. Also, the identity of people using the web sites is fully verified from a variety of sources, meaning you can be confident that people are who they say they are and that their creditworthiness is accurate.
How does someone lend me money?
You are lent money in much the same way as a bank, only you the lender is an individual. People advertise online the loans that they are offering, and you can apply for these loans like you would any other loan. The person offering the loan can see information regarding your credit worthiness and your ability to pay back the loan. They will then decide whether or not to give you the loan.
Will it catch on?
Although it is in its early stages, person-to-person lending looks like getting more popular as the technology and security improves. People still have issues of trust with such systems, but they are likely to prove their effectiveness in time. If you want to look for a different way of borrowing or investing money, then person-to-person loans might be the answer. You might even get better terms than you would from a traditional lender.
Poor Credit Home Equity Loans - Avoiding Home Equity Loan Scams
Obtaining a home equity loan makes it possible to payoff credit cards, finance a home improvement project, etc. In fact, one of the benefits of homeownership is being able to tap into your home's equity for large expenses. Many lenders offer great rates on home equity loans and lines of credit. Yet, homeowners should beware home equity loan scams that place them at risk of losing their home.
Understanding Home Equity Basics
A home equity loan is essentially a personal loan that is secured by your home's equity. The amount you are able to acquire will vary. For the most part, you are able to obtain a loan up to the amount of your home's equity. However, lenders will usually review your credit and income to ensure that you qualify for the requested amount.
Home equity loans are beneficial because the funds may be used for a multitude of purposes. If you are looking to payoff credit card balances, a home equity loan will help you achieve this goal. Nonetheless, exercise care when applying for such a loan. Because your home serves as the collateral, failure to maintain regular payments will result in foreclosure. Sadly, some lenders are betting on your inability to repay a home equity loan.
Common Home Equity Loan Scams
Lenders use an array of fraudulent schemes to steal your equity. For starters, there are lenders who cleverly convince homeowners to borrow more than they can afford to pay.
Moreover, a lender may encourage homeowners to exaggerate their income in order to qualify for a larger amount. Instead of having your best interest in mind, these lenders knowingly position their clients for defeat. Hence, when you can no longer afford the payments, the lender forecloses.
If applying for a home equity loan, it is important to read the loan agreement carefully. If possible, have the contract reviewed by an attorney. Some home equity loans involve a large balloon payment at the end of the loan term. The typical homeowner cannot afford to pay this amount. Regardless of whether you maintain timely payments, the home equity lender may claim your home if you are unable to make the final payment.