How to Get Loans From P2P Lending Platforms in the Philippines
Why is P2P lending called this way? Who are the “peers” involved here? Is P2P lending even legit? Have all your questions about peer-to-peer lending and more answered right now!
When we think of loans, we probably think of the following things: borrowing from banks, loan apps/online lending platforms, cooperatives, etc. Sometimes, we even think of borrowing from our friends or families. The latter is generally not the best idea, but what if there’s an option where you get to experience the best of both worlds—borrowing in a legitimate, professional way, but from a peer or investor?
Enter this little thing called “Peer-to-Peer" lending. It’s yet another way of borrowing money, but instead of a big financial institution or just the people around you, it’s from actual people who are willing to lend money, called peers. Using this method, you not only just borrow money, but lend it out too!
Too good to be true? Learn more about the world of peer-to-peer (P2P) lending and all the things you need to know about before trying to borrow or loan money in this manner.
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What is Peer-to-Peer Lending?
This is short for “Peer to Peer” lending, meaning you loan from actual individuals and peers instead of a financial institution, like a bank. It’s pretty much an alternative to traditional financial companies. You get the loans from a pool of money from investors (sometimes, even just one investor). An example of a P2P lending platform is Blend.ph, where you can both borrow or invest. It’s a little like how a mutual fund works.
Apart from you borrowing money, you can also choose to loan your funds to others and possibly have your cash grow as well.
Pros and Cons of P2P Lending for Borrowers
Pros of P2P Lending
- Fast application – There is still checking of credit history involved to gauge a borrower’s capability to repay, but they aren’t as strict as compared to banks or other traditional companies.
- No collateral – These P2P loans are unsecured, so you don’t need collateral for it.
- Credit checks aren’t that strict – Again, this is because your loan is secured by collateral, so interest rates would be low as well.
- Low interest rates for those with good credit – In relation to the previous point, the interest rates usually vary according to your credit. If you have good credit, your interest rates are lower, while if you don’t, your interest rates tend to be higher. This is a pro if you’re a responsible borrower.
Cons of P2P Lending
- High interest rates for those with bad credit– Got bad credit or little to no credit history? The good news is that your loan may be approved. But the bad thing is, you may be given loans with higher interest rates since you’ll be considered a high-risk borrower. With P2P lending, remember that interest rates vary on your credit history, as mentioned before.
- Additional fees – If you’re a borrower, there may be additional fees to your loan added apart from the interest rates, like processing charges.
- You may not have adequate borrower’s protection – Let's say you have a hard time paying your P2P loan back. With more traditional lenders, you have better protection, compared to P2P websites that may report you to a debt collection agency. This might have you run into legal trouble.
How to Borrow Money from P2P Lending Platforms in the Philippines
- Register for an account on your chosen platform– Sign up for your account by placing in the necessary information.
- Choose the type of loan you’re looking for – These platforms have multiple kinds of loans, from personal to auto loans. Compare and pick the one that best suits your needs.
- Fill out an application form – It’s all online, so don’t worry! Simply input the details asked for and then provide all the documents you need to show as well. Like most online loan applications, it won’t take longer than a few minutes.
- Wait for your application to be approved – This is the part where your chosen P2P platform evaluates your application. Hang tight and wait patiently!
- Get loan approval and disbursement – Approved? Woohoo! You’ll be able to get your loan funds disbursed after you’re contacted by your lender or investor.
Again, applying for a loan isn’t rocket science! If you’re wondering about how much P2P interest rates are, they depend on your credit standing, though the cheapest interest rates can go as low as 1%-3%.TOC
Tips for Borrowing Money from P2P Lending Platforms
Are you new to P2P lending? Check out these helpful tips before trying it out!
- Look up your preferred platform thoroughly – It's kind of like choosing the bank or app you want to loan from. You have to do your research on multiple things, such as the background of the company, the terms and loan amounts available, processing fees, etc. Eventually, you’ll land on something that’s right for you.
- If possible, clean or build your credit score – If you have bad or little credit history, it may be a good idea to start shaping it up a bit. This will help you get better interest rates for your loan. When you borrow from P2P platforms, your interest will highly likely depend on your credit score. The riskier/the lower your score is, the higher your interest rate will be. Good interest rates will be given to borrowers with good credit.
- Detail your loan request – Your loans from P2P platforms come from investors—real people who are willing to lend you money and invest in your cause. So, when you do apply for a loan using P2P, you need to put as much information and details as possible. It’s likely that investors aren’t going to loan to you if your request seems shady or not meaningful. Put down why you need the loan and all the necessary information that will make them want to fund you.
Best Alternative to P2P Loans
Too new to this loans world business and not eligible for a P2P loan? No worries, luv! There’s another easy way wherein you can loan fast and efficiently—personal online loans! There are lots of options and lending companies that you can find on the internet, but among the best in the Philippines is Tonik’s Quick Loan, of course!
Why? If you haven’t heard about it, Tonik’s Quick Loan allows you to borrow up to PHP 50,000 after you get a Tonik Account and sign up for the loan. It’ll only take about 30 minutes or so, including the application. You just need to fill in the necessary information and submit 2 documents: your valid government ID and an income document (ITR, Certificate of Employment, latest pay slips, etc.). You can also choose your own payment terms, whether that’s 6 months or 24 months.
Then bam, after your approval, you get your loan straight to your Tonik Account. It’s that easy, luv. Too good to be true? Read it yourself right here and understand why it’s among the best options you have.
- Advantages and Disadvantages of Peer to Peer Lending
- Peer to Peer Lending
- Peer to Peer Lending Philippines