People who need to get a loan might want to consider the differences between a payday loan vs. Prosper. Taking out a loan is always serious business, but we’ve all been there – the day that the landlord comes knocking on the door and says that you need to pay the rent, or the afternoon you are sitting in the dentist’s office and realize that the pain you are about to feel in your budget might be greater than the one in your tooth. Finding a quick solution to these problems isn’t always easy – especially if you have a less than perfect credit score.
Many people turn to payday loans to take care of these situations. Payday Loan offices display large neon signs out in front to attract your attention, and offer immediate cash. They require very little in the way of credit ratings. It sounds good at first – especially if you’ve been turned down by more traditional sources. But Prosper’s peer to peer lending loans are a safer, more economical way to borrow money.
Here are five reasons why peer to peer lending through Prosper is a much better choice than payday loans:
#1: Payday loan establishments charge some of the highest interest rates you will find anywhere in the financial world – sometimes as high as 600%. At that rate, it doesn’t take very long at all for a small emergency to become a huge one that makes your financial burdens greater than they were before. Within a single month, a $100 loan can turn into a $600 loan. Prosper rates usually top out at around 15% -- and can be as low as 6.8% if you have a good credit rating. That keeps your emergency down to a level your budget can handle.
#2: Some payday loan places penalize borrowers with large fees if they attempt to pay off early by charging large fees. That means that even if you have the money to pay off early, you gain very little from clearing up the debt. Prosper does not charge any sort of fee for early pay-off of your loans, and will be happy for you if you are able to meet your obligations ahead of time.
#3: Payday loans sometimes ask borrowers to submit a post-dated check or arrange an automated payment to cover your repayment amount. They might not work with you by holding the check or postponing the payment should you be short of funds. This can cause problems with your bank account, and can mean that after paying the payday loan installment, you have even less money than you had before. Prosper will help you find alternative solutions should you discover that you are having difficulty with your payments.
#4: Payday loans will sometimes pressure borrowers to take out extensions of their loan. This might look like a good deal at first, but it actually means that the borrower will pay extra fees, and sometimes higher interest. Certainly, an extension means that you will have a much larger sum to pay off. Prosper’s interest rates are set at the beginning of the loan, and they will not increase throughout the life of the loan.
#5: Twelve states in the US have made Payday loans illegal. Arkansas, Arizona, Connecticut, Georgia, Kentucky, Maryland, New Jersey, New York, North Carolina, Virginia, Vermont and West Virginia have made laws against them. Borrowers can, however, enroll in a peer to peer Prosper in all of those states.
In a perfect world, no one would ever need to borrow money. But sometimes, life gives us these big speed bumps, and we need a little extra to get over them. Payday Loans are a harsh way to get the money you need. Prosper is a much kinder, safer way to get the cash your situation requires.
With that said, borrowing money is always a serious step. When you borrow money, you are using something that belongs to someone else. Just like a favorite wrench, a library book or a piece of jewelry, it needs to be returned. This is especially true in peer to peer lending, where the funds come from real people who are not very different from you. Paying interest on money is the way you thank the lender; and paying back as promptly as you can means there are funds available for the next person who needs help.
If you do need to borrow money, it is best to borrow smart. Get the best deal for yourself that you can – and that means borrowing from a responsible institution that has reasonable rates and a reasonable repayment plan. Peer to peer lending from a platform such as Prosper encourages borrowers to budget responsibly so that they can get the money they need, and be able to pay it back at a reasonable rate. Payday Loan companies are primarily interested in using your money to make money for themselves – they are not in the least concerned about your personal situation.
Peer to peer lending can offer better deals than banks, credit cards or payday loans – partly because it has a lot more resources at its disposal when making decisions about who is a responsible borrower and who is not; and partly because the funds come from businesses that have ways other than interest with which to earn money. Peer to peer lending platforms allow money to move through the economy – rather like water irrigating a field. That is good news for businesses – the places where you, and borrowers like you, are likely to spend their available funds. In a very strong sense of the word, they have a vested interest in helping you to maintain a responsible budget.
Just to go over them one more time, here are six great reasons to use Prosper for your credit needs:
1 - Low interest rates. Average rates from Prosper are around 15%. If you have a good rating, they might be as low as 6.8%. Payments will be set at a reasonable amount that will take your over-all budget into consideration.
2 - Your rates will not go up. Even if you hit a bad patch and have to miss a payment, you will pay the same interest rate you were scheduled to pay in the first place.
3- If you get a windfall and can pay off that loan early, there are no early pay-off fees, no penalties – just a straight-up chance to get out of debt and stop paying interest.
4 - Prosper is available in all states – even where Payday Loans are illegal.
5 - The amounts you can borrow are pretty generous. They range from $1000 up to $35000 – that’s enough to take care of a car repair, or the deductible on most health insurance policies.
6 - You get your money fast-- within 6 business days of approval.
There you have it: the better way to borrow money if you need that little something extra to help you manage your obligations. Prosper has both your current well-being and your future financial health as well. It is clearly your best choice if you are in a situation where you need a loan.