When you follow for a P2P loan, the procedure typically entails the following steps.
- You complete and submit an on-line application. This step will normally consist of a credit inquiry—either soft or hard.
- The lending platform may also assign you a risk category or grade. Your rating will affect the interest rate and terms you’re offered. If you’re satisfied with an offer, you can choose to move forward.
- Investors evaluate your loan request. You can include important points such as how you plan to spend the money or why loaning money to you is a proper risk. Your story may additionally improve your odds of receiving funding. Depending on how the P2P platform is structured, lenders may also make bids to strive to win your business. However, your loan request would possibly also be passed over.
- You accept the loan. If an investor makes a bid that you’re pleased with, you can evaluate the terms and accept the loan. Depending on the platform, the funds may want to be deposited into your bank account as soon as the same day or within a week.
- You make monthly payments. In general, P2P lenders report accounts to the credit score bureaus like usual lenders, so late payments could harm your credit score. Late payments may additionally come with late charges that increase your overall cost of borrowing.