When it comes to borrowing an unsecured personal loan or a business loan, from a peer-to-peer lending platform company, like Peerform, Upstart, and Lending Club, there are many decisions to make when choosing a lender.
Every individual peer-to-peer lending company has its own specific stipulations and requirements for potential borrowers and investors to prosper. Most P2P online lending companies charge an initial fee, in order to perform a soft credit check to verify one's APR, FICO score, any outstanding credit card debt or student loans, etc. called an “origination fee.”
A potential borrower can easily end up spending a larger sum than one originally budgeted for if they are turned down from multiple lenders due to the state of their APR. The best peer-to-peer lending companies appreciate borrowers who have done their homework, in terms of doing research to find the online lending company which is right for them prior to applying.
Peerform reviews tout that Peerform is one of the online P2P lenders which caters to potential borrowers with credit scores that are lower than average. Peerform is one of the best peer-to-peer lending companies for people with bad credit.
Peerform operates by connecting an individual who is looking to borrow a loan with investors who wish to lend money at a percentage rate of return. This is the reason for the industries designation of peer-to-peer lenders.
Instead of borrowing funds from a financial institution, peer-to-peer lending services offer an online interface from which individuals, who offer a financial service, can be connected with individuals who desire to take advantage of funds available through accredited investors.
Here's a brief video from Peerform explaining how peer-to-peer lending works:
In order to become a borrower from Peerform, you first must pay an origination fee. This is for the purpose of performing a credit check of which, Peerform will use to assess the risk of any individual loan that is proposed and to set the appropriate interest rate, in the case of a loan being approved by Peerform.
Peerform grants loans to borrowers with relatively low credit scores and gears their services towards that demographic of borrowers. However, they will not approve loans to potential borrowers, whose credit score falls below 600. Peerform does not require proof of a minimum income, which benefits potential borrowers with below average incomes.
Additionally, Peerform requires just one year of credit history, which is potentially valuable to potential borrowers whose credit history is limited, due to age or fiscal history.
At present, Peerforms loan borrowers average out to a credit score of 665 and carry an average yearly income of around $85,000. Peerform has stated that the debt-to-income ratio, averaged across their portfolio of borrowers is just above 90%.
When applying for a loan from a P2P lending company, the company will assign a potential borrower a grade. The grade is based on the potential risk of the loan, based on a borrower's assets and credit history. An individual's grade will dictate the interest rate which will be applied to the loans repayment term. One's grade will then be used by investors, for the purpose of funding—or not funding—any particular borrower's loan.
Peerform clearly defines the standards and rating structure with which they judge a borrower's grade from. An individual's credit score will be translated into a Peerform Grade, which will dictate a loan's Interest rate and APR. The Peerform Grades are delineated, seen as Grade-Interest Rate, as follows...
- AAA - 5.32%
- AA+ - 7.49%
- AA - 8.99%
- A+ - 10.49%
- A - 11.99%
- BBB - 13.49%
- BB+ - 14.99%
- BB - 16.49%
- B+ - 18.49%
- B - 19.99%
- CCC - 21.49%
- CC+ - 22.99%
- CC - 23.99%
- C+ - 24.99%
- C - 25.49%
- DDD - 26.06%
As a hypothetical example; if a customer takes out a three-year-long, $20,000 loan with 10% APR, their required payments will be about $645 a month.
Peerform does not use a credit score exclusively in the determination of whether to approve a potential borrower's loan request. They use a computer algorithm, called a “loan analyzer,” which looks at a wide array of personal information pertaining to an individual borrower's fiscal history.
For those that Peerform approves to be a loan borrower (many of whom have credit scores that fall below 650), the choice remains as to how much money will be offered and how long the repayment term will be set for the loan. Personal loans with Peerform are available in a variety of amounts, not exceeding $25,000. Most banks and other peer-to-peer lenders, also keep personal loan amount maximums around $25,000.
Peerform offers competitive interest rate minimums, starting around 7%. If a borrower's credit is very good or excellent, their risk assessment grade will be better, resulting in a low-interest rate being granted by Peerform. However, for borrowers who turn to Peerform because of their willingness to lend to individuals with low credit scores and bad credit, it is likely they will receive a higher interest rate.
Peerforms maximum interest rate on personal loans hovers around 30%. Peerform does not offer a flexible repayment plan with regards to a borrower's due dates for payment. However, unlike many larger peer-to-peer lending companies, Peerform does not charge a fee for prepayments. In addition, Peerform offers an interim period of 15 days, before late fees are charged on late payments.
- Minimum Credit Score: 600
- Minimum Income: Not Required
- Minimum History of Credit: 1 Year
- Maximum Ratio of Debt-to-Income: 40%
- Annual Percentage Rate of Interest: 7% - 30%
- Minimum Loan: $1,000
- Maximum Loan: $25,000
- Repayment Term: 3 Years
- Funds Received: 3-14 Business Days
- Origination Fee (Based on Loan Amount): 1% - 5%
- Prepayment Fee: Not Required
- Late Payment Fee (Whichever is Largest, Based on Loan Amount): $15 or 5%
One aspect that causes some negativity in Peerform reviews is that at present, obtaining a loan with Peerform is not available in all 50 states. The states in which one may borrow a loan from Peerform, include; Alaska, Alabama, Arizona, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Louisiana, Maryland, Michigan, Minnesota, Missouri, North Carolina, New Hampshire, Nevada, New York, Ohio, Oregon, Tennessee, Texas, Virginia, and Washington State.