Many consumers that have been considering debt consolidation might have found it difficult to get a loan from traditional banks thanks to the tighter lending restrictions forced by the economic downturn.
Butthere is a new trend that has helped many Americans get the money they’re looking for called peer-to-peer lending. According to CBS News, the movement is taking hold because consumers now recognize it as a cheaper alternative to borrowing from banks for a number of reasons. While peer-to-peer lending sites do take into account credit score, credit history, income and employment situation, they have less stringent restrictions for who they will lend to, and lower rates as well.
While there are fees involved with using these sites, those seeking a loan for debt consolidation should be aware that they are typically lower than those credit card companies charge for balance transfers, the report said. There’s also no fee for paying back the loan early.
According to the consumer advice website Bankrate.com, debt consolidation loans are typically difficult to pay off when they are issued through banks. Peer-to-peer lending might alleviate some of those troubles for borrowers.