If you are in the market for a personal loan, you should consider a Peer to Peer (P2P) lender over the established banks. P2P lenders offer many advantages and more often than not will give you a better deal on the loan over the Big Four.
When you borrow from a P2P lender, you are tapping into funds provided by a group of investors who have signed up with the lender. Investors have to apply to the lender and are screened and selected before they are allowed to lend on their platform. Furthermore, they cannot see any personal or identifiable details about anyone they lend to.
In essence, P2P lenders are like Airbnb and Airtasker – they connect two sides of a marketplace and take a small commission on the transactions.
However since these lenders have lower costs than their bigger rivals, they can drive a better deal. In addition to lower rates, they can offer more flexibility such as no monthly or exit fees.
Two of the most popular P2P lenders in Australia are Ratesetter and Society One. You apply for P2P loans online, and the lender will still look at your credit and employment history as well as your financials when making their lending decision.
And like all loans, make sure you read the product disclosure statement and the review comparison rate to see how much the loan will cost you in total.