mortagesandforeclosures

by Hunter Fisher

Ever wonder why there is so much fuss involved when you need to get a loan of $25,000 or less? Usually, banks and other moneylenders require you to go through complicated application process and stiff prerequisites, making it more difficult to get the money you need as soon as possible.

This is why getting a loan from social lenders on the Internet is a better substitute - lenders like these have lower interest rates than banks most of the time. Lenders on the Internet also enjoy greater profits compared to other lenders. So, everybody wins! However, this is a new set-up, so be cautious when dealing with online lenders.

If this is the first time you've heard of online social lending, here are a few pointers you need to know:

Are Online Social Lenders Better Than Banks?

Social lending is now more popular than many traditional mediums of borrowing money, simply because it is easier and faster.

While banks may be quick to turn down loan applications, online lenders seem to listen to their borrowers' situations more closely and take risks on them more readily. The reason why they can afford such risks is because they often partner with other lenders who share and distribute the risk.

Nowadays, banks are still the major money lenders. However, social lenders online are becoming more popular. This is can be beneficial. They are becoming a better choice for money loans to be used as business capital and to start small business.

The Good And Bad Of Online Lending Sites

The most popular sites are:

- Zopa has a quick turnaround time for loan applications and it doesn't charge transaction fees. However, if you have a poor credit rating, your application will be denied. The interest rate you will be charged with will also depend on your credit record.

- The Lending Club, which started out on Facebook takes advantage of social networks to try to work out a loan program for you. As with Zopa, interest rates depend on your credit scores and even if your application is approved, there is no guarantee that the money will be given to you.

- Virgin Money arranges loans between family members. It takes care of properly documenting loan agreements and terms between related parties. It takes anywhere between one to three days to process transactions. If you already have lending prospects, though, you may find the services of Virgin Money unnecessary for you.

- Prosper operates like an auction site - except lenders bid on interest rates. The borrowers indicate the amount they are willing to pay and lenders try to win their business by bidding down on that rate. The drawback is that borrowers aren't guaranteed funding as there may be other people who are willing to pay for higher rates.

Bottom line

There are many conveniences that an online social lending site can afford you. If you find you are getting nowhere with banks and other credit institutions, this may be the opportunity for you. Make sure to do adequate research on all the available lending sites so you know which services best meet your needs.

About the Author:

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Get all the information and photos:: http://mortgagewide.info/online-social-lending-a-primer/