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The emerging marketplace of online peer-to-peer lending, or P2P, platforms isn’t as heavily regulated as bricks-and-mortar banks, but being directly connected over the Internet to a pool of lenders willing to back all or part of a loan can be an inviting alternative to more traditional lenders.
But not all peer-to-peer lending companies are created equal, and the burden of due diligence sits squarely on the shoulders of the prospective borrower.
“There are several major P2P lenders, such as Lending Club and Prosper, and many smaller companies jumping on the bandwagon,” says Ryan Guina, founder of CashMoneyLife.com. “Bigger doesn’t always mean better, and smaller doesn’t mean worse. But, there are advantages to using the more established platforms, including a more highly regulated process and a larger investor pool, which makes it more likely your loan will be funded.”
Here are a few tips from experts in the field on how to avoid getting conned by unscrupulous players.
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