Can You Use Debt Consolidation With Peer-to-Peer Lending?

When traditional lending models are out of the question for either personal or credit purposes, there’s another option on the table called peer-to-peer lending or P2P for short. This lending model connects people who are looking to invest with people who are looking to borrow. In the near decade that this lending model has been in US., two companies in particular – Lending Club and Prosper – have helped several people use this secure lending model. You can get a loan for pretty much any need, including debt consolidation.

Studies from show that at least half of those who seek lending on these sites are using the money to pay for other debts. Due to high interest rates of credit cards, this lending model becomes highly appealing because P2P lenders generally have much lower rates.

Before contacting a P2P lender, keep in mind that….

  • You will likely have to agree to auto payments.
  • Your loan will be about 3 to 5 years.
  • You generally can borrow no more than $30,000.

Deciding whether this lending model is right for you will depend on your individual needs. Just keep in mind that these lenders are just like any other debt and will be listed on your credit report.