How Does Peer to Peer Lending for Bad Credit Work?
Peer to peer lending services work by bringing together lenders and borrowers. The lender is expected to set-up an online account and deposit funds via ACH (Automated Clearing House), wire, check or PayPal. A borrower who is interested in availing loans, is expected to apply online and post his/her requirements, viz. loan amount, the reason for the loan, the credit scores, the existing level of debt and other relevant information. Although the borrower’s credit score is taken into consideration, the lenders tend to diversify their risk by lending small amounts to a large number of borrowers. Lenders can lend as little as $50 to the applicants. Even if a few bad credit consumers do default, the chances of the lender recovering the principal and the interest on other loans is a distinct possibility. The lenders stand to gain in the form of interest and principal on the money that is lent. Moreover, they are not charged an account maintenance fee. The borrower has the opportunity to avail
