What is Social Lending?

Social lending provides borrowers with an alternative to traditional lending sources. Social lending is also commonly referred to as peer-to-peer lending. With this type of lending, you are essentially borrowing money from another individual, instead of a financial institution. People that have extra money to lend often get involved with social lending in order to help others and make a return on their investment.

How It Works

There are many different ways that social lending occurs. Many people utilize social lending sites on the Internet in order to facilitate loans. These sites create an easy way for borrower and lender to connect. For example, if you need money, you may be able to set up a profile and loan request on one of the sites. Lenders will then be able to review loan requests and select between them. Typically, the social lending site will pull the credit file of the borrower and present generic lending information to the lender. Lenders can bid on the interest rates that they are willing to provide based upon the credit rating of the potential borrower. If you need money, social lending may be something that you want to consider in the future.

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