Break Free from Debt with a Peer-to-Peer Loan

by Mike on March 18, 2014

Break Free from Debt with a Peer-to-Peer Loan

Living under the spell of debt can affect every aspect of your life – particularly if you owe money to several different lenders and your trying to juggle out the repayments. It can severely curtail your spending power, cause you a great deal of stress, and ultimately lower your standard of living. If you are finding that the interest payments alone are causing you financial hardship, there may be a viable alternative – a debt consolidation loan from a peer-to-peer lending provider.

Why Choose a Peer-to-Peer Loan?

The huge problems encountered within the UK banking industry (and worldwide) have resulted in many of the leading financial institutions tightening up their lending criteria leaving many of us with few options. As well as refusing loans on the basis of poor or incomplete credit histories, banks are also reluctant to issue unsecured loans for the purpose of debt consolidation. And where such facilities are available, they have very high rates of interest associated with them that often make the loan not worth undertaking.

With rates as low as 5%, and with many carrying no early redemption fees, peer-to-peer loans can help you to reduce your interest payments by paying a fixed rate to just one lender. Moreover, they give you the opportunity to simplify your monthly finances by dealing with just one provider. At a time when the banks are controlling their purse strings more stringently than ever, the amount being lent and borrowed via peer-to-peer services is rising rapidly – and that is good news for your finances.

What Are the Benefits of Consolidating Debt in This Way?

As well as the logistical problems dealing with several banks and credit card companies involves, paying more than you need to in interest can leave your finances in a precarious state. Some people turn to more expensive credit providers, which can exacerbate their financial woes in the long run and drag out the actual period it can take to pay down your debt. Lenders who lend money via peer-to-peer platforms are real people who simply want a healthy return on their investment. Peer-to-peer service providers don’t have the high overheads of major financial institutions, and if you have a good credit history they will be in a position to offer far cheaper credit – as long as you can demonstrate your ability to keep up with the monthly repayments.

The paperwork trail of borrowing vs peer to peer

If the financial pressure of keeping up with several debt repayments is quickly catching up with you, it may be necessary to secure funds in a hurry. However, the process is longer and more complex than ever if you decide to lend from a traditional bank. But because application procedures with peer-to-peer providers are typically innovative and streamlined, delays are minimised and you can start enjoying a life free from the specter of debt more quickly.

Getting out of long-term debt commitments can be difficult, but there are clear rewards to enjoy for those who achieve it. Interest payments stack up, and they can snowball if payments are made late or deferred. With low rate loans from peer-to-peer providers, however, you can spread the cost of your debt, save huge amounts of interest and have more money in your pocket at the end of every month.

***Photo thanks to LendingMemo***

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