In the past, it used to be that, if you wanted to borrow
money, you went to your bank and asked for a loan. If the bank said yes, then
you got the money, plain and simple. And, if it said no, you could go to
another bank, but beyond that, you were out of options. Fortunately, in today’s
world, when the bank says “no” to lending you money, you still have other
options you can try, and a lot of them exist thanks to the internet.
There are, for example, many small business and personal
lending sites, such as Kabbage, which
There are also many peer to peer or marketplace lending
sites going strong these days, and what all of these options boil down to is
this: you have a lot more opportunities to get the money you need! It’s wise to
take advantage of these opportunities; just make sure you protect yourself as
you do.
Peer to Peer/ Marketplace Lending
You’ve probably seen sites such as GoFundMe.com and
Kickstarter.com. These sites allow users to solicit donations, of any amount,
for various causes. These causes can range from “wants” like a big vacation to
“needs,” such as the costs associated with medical bills. People from all over
the world can contribute, a little bit a a time, to any cause they deem worthy.
These sites are popular because, believe it or not, the campaigns often work,
and people end up getting some or all of the money they need.
Peer to peer or marketplace lending sites work in a similar
way. The only difference is that the people behind the campaigns promise to pay
the money back. So, instead of the funding counting as a donation, it counts as
a loan and sometimes even as an investment.
Other sites, such as the aforementioned Kabbage, function
more like direct lenders, but it’s individuals or businesses backing the loan,
not a traditional bank.
Staying Safe
While these types of sites have opened up opportunities
where there weren’t any before, they have also opened the door for clever scam
artists. To protect yourself, never use a site that requires any kind of a
deposit or fee to request a loan. When you’re in need of money, legitimate
sites know that the last thing you need to be doing is spending it.
Also, thoroughly research any site you are thinking of using
and check to see that it exists with the Better Business Bureau and that it is
in good standing with it. Also, never deal with “payday loan” type sites that
function by taking a large amount from your paycheck each pay period as
“payback” and which typically charge extremely high interest rates. Finally,
don’t provide any identifying information, such as your bank account numbers,
without knowing, for sure, that you have been approved for a loan, what those
loan terms are, and that the site is legitimate and trustworthy.
Getting Approved
Just because you find a legitimate lending site doesn’t
necessarily mean you will get approved for a loan. In fact, if a site accepts
absolutely anyone’s loan request, regardless of credit history or other
factors, that’s a pretty big red flag that it cannot be trusted.
In general, most lending sites will not approve your request
if you have a very low (below 640 or so) credit score, if you have bankruptcies
in your recent past, or if you have a ton of debt. These factors don’t make a
loan impossible, however. They just mean that you may have to do some work on
your credit before you stand a chance of getting approved.
Know where you stand by checking out your credit score ahead
of time and then working, for at least a few months, to improve it, if
necessary. Once you stand a good chance of getting approved, compare interest
rates and other terms and conditions from site to site to the find the best and
most viable deal for your lending needs.
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