Are you in a financial pinch? A personal loan can be your only way out of the financial crisis. It can be used to cover any unexpected expense, repay your debt faster or even buy the latest model of a phone you’ve been looking forward to. The good thing is that you can use a personal loan to cover any cost.

The faster and most sought-after loans are personal loans. Even though mortgages are also on the rise and make up the largest portion of debts overall, in the past few years, people have taken out personal loans faster than any other loans like credit cards or auto loans.

Nowadays, you can take out a personal loan to cover your living expenses. However, some don’t know how and when to start.

What’s a personal loan?

A personal loan is a loan you can borrow from online lenders, credit unions or banks. Usually, it is fixed monthly installments with interest added. Generally, personal loans are secured, meaning you won’t have to offer a property or your asset as security.

The rate for a particular loan varies between lenders. However, it can range from 8.5% to 12%. However, the interest rate you’ll receive depends on factors like the DTI ratio and credit score. You can use the amount to pay for some of your living expenses if your income isn’t sufficient.

What to consider before you apply for personal loan

Before you take out a personal loan or start to plan the amount to borrow, these are some important considerations to make:

• Ensure you understand how the lenders express the cost of the loan to ensure you can repay it.
• You can use an online calculator to help you know the actual payments you should make every month.
• Go for other options. Even though they are cheap to borrow, do not overlook other sources you can use to get cash.

Some documents are needed when applying for personal loans.

Every lender is different and can ask you for different documents when applying for a loan. When applying for a loan, you can be asked to provide your address, income, or SSN number. Also, there are some documents you can provide, like:

• Proof of your identity like a passport or driver’s license.
• Proof of income where you’ll have to provide tax returns, bank statements and more. For self-employed people, you’ll have to provide bank statements or tax returns.
• Proof of your address, such as a utility bill or rental agreement.

How to get personal loan

Before getting a personal loan, there are several tips you have to consider. Not every person can get a loan. You should meet certain requirements before you can get a loan.

Decide the amount you can borrow

When you borrow less than you need, you might turn to other loan sources. Also, ensure you can comfortably repay the loan amount you borrowed. It isn’t cool to overextend yourself financially. The best thing is to wait for some time till your finances improve.

Check the credit you have

If you don’t know, personal loans largely depend on the creditworthiness of an individual. The lender checks your scores before approving your loan. Before you apply for a loan, check your report from any credit reporting bodies. It is advisable to do that before applying for a personal loan. Such actions are known as soft inquiries, and none will affect your credit score or creditworthiness. This happens only when you take out the loan, and your lender makes a hard inquiry.

Pick the lender, then apply

After doing research, you should pick the lender offering the best offers and start your application process. There are some lenders who allow online applications. Additionally, there are some others who need you to apply for the loan by going to the local branch.

In short, each lender is different regarding the information you need to apply for the loan. However, you will usually be required to provide your address, name or contact information, income, or employment information.

You will also state the amount you want to borrow. You have to complete the loan terms, including the fees and the tenure. But check the loan agreement thoroughly to see hidden costs or other pitfalls. This will help you determine if the lender.

Summing Up

As you can see, you can easily apply for a personal loan through website or personal loan app. The best thing about acquiring a personal loan is that no collateral is needed to avail the loan. You don’t have to provide your only asset to get the loan. As such, applying for a loan will be very easy.

You should repay your loan over a set term, normally 2 to 5 years. Best personal loans depend on your creditworthiness, measured by the credit score and the reason for applying for the loan. If you have a good credit score, you can get a loan inexpensively.

What is Peer to Peer (P2P) Lending

In recent years, Peer-to-Peer (P2P) lending platforms have gained considerable popularity in India, revolutionizing the investment and borrowing landscape. These online platforms connect borrowers directly with lenders, creating a mutually beneficial lending ecosystem. The availability of internet access, coupled with the underserved credit needs of individuals and small businesses, created an ideal environment for Peer to Peer  lending platforms to thrive. These platforms leverage technology to facilitate loan transactions, matching lenders’ investment preferences with borrowers’ credit requirements.

Investing in P2P lending platforms offers several benefits for investors looking to diversify their portfolio and earn attractive returns.

Here are some key advantages

Higher Returns: P2P lending platforms provide an opportunity to earn higher returns compared to traditional investment options. By directly lending to borrowers, investors can potentially earn interest rates that surpass those offered by traditional financial institutions.

Diversification: P2P lending allows investors to diversify their investment portfolio with a new-age investment avenue that is non-market linked. This diversification helps mitigate the risk and helps to balance the portfolio.

Accessibility: P2P lending platforms provide access to a previously untapped market of borrowers, including individuals and small businesses who may struggle to secure loans from traditional financial institutions. This accessibility allows investors to support creditworthy borrowers who might otherwise be overlooked by banks.

Passive Income Stream: P2P lending can generate a passive income stream for investors. Once funds are invested, the platform handles loan disbursement, repayment collection, and borrower management, reducing the need for active involvement. Investors can earn regular interest payments, which can supplement their income or be reinvested to compound returns.

Technological Efficiency: P2P lending platforms leverage advanced technology and automated processes, streamlining the investment process for investors. These platforms use Artificial Intelligence and Machine Learning technologies to assess borrower creditworthiness, minimizing the time and effort required for due diligence.

Following are the best P2P lending platforms to invest in P2P lending.

LenDenClub: LenDenClub is India’s largest P2P lending platform in India, providing investors with attractive returns of up to 12% p.a. on their investment amount. LenDenClub has revolutionized the P2P lending landscape in India by introducing their P2P lending investment plan called FMPP because it is available to all investors.

Faircent: Faircent is a prominent P2P lending platform in India that offers lenders the opportunity to invest in loans. Investors can explore a wide range of loan listings and select loans based on their risk appetite and expected returns. Faircent has successfully established itself as a trusted platform, facilitating lending transactions between borrowers and lenders.

Lendbox: Lendbox operates as a P2P lending marketplace, connecting borrowers in need of personal loans with potential lenders. The platform caters to various loan purposes, including debt consolidation, education expenses, medical bills, and more. Lendbox provides an avenue for investors to participate in P2P lending and contribute to borrowers’ financial requirements.

i2iFunding: i2iFunding is another P2P lending platform that allows individuals to invest in loans. Investors can diversify their investment portfolio by selecting loans from different risk categories offered on the platform. Returns are generated based on the interest charged on these loans, providing investors with potential earnings.

RupeeCircle: RupeeCircle presents lenders with an opportunity to invest in loans across a range of risk categories. Investors can choose loans based on borrower profiles, loan purposes, and interest rates, enabling them to diversify their investment and minimize risk. RupeeCircle aims to facilitate secure lending transactions and offer attractive options for investors.

Check out the Best P2P lending platforms in India

Conclusion

The P2P lending industry is dynamic and it is important to note that the landscape is continuously evolving, and new platforms may emerge or existing platforms may undergo changes. Therefore, we recommend conducting thorough research, reading user reviews, and taking into account factors such as interest rates, loan terms, borrower verification processes, and customer support before selecting a P2P lending platform. Staying informed and updated about the latest developments in the industry will help ensure that you make well-informed decisions when choosing a P2P lending app.