Peerform is one of the best peer-to-peer lenders on the market for bad credit loans. Using the Peerform Loan Analyzer, your application is judged by a more holistic approach to loan approval than just your FICO score.
As with most other peer-to-peer lenders, you are assigned a grade level based on your financial and credit information and your interest rates are based on that rating. Your loan must then be funded by investors through Peerform’s online marketplace platform — think of it as a Kickstarter campaign, except investors get the loan interest as a return on their investment in you.
You might have several investors take a stake in your loan, or have your entire loan funded by one. It may sound like a lengthy process, but in reality, it’s quite quick and comparable to other lenders. If this sounds like an intriguing process, keep reading to find out more about Peerform personal loans.
Peerform Personal Loans
Regardless of your credit history, you could qualify for a Peerform loan between $1,000 and $25,000. No collateral is necessary for these unsecured loans, making it a lower risk option.
All Peerform personal loans have fixed rates that range from 7.12% to 29.99% APR. Origination fees are included in the APR and cost anywhere from 1% to 5% of your loan amount depending on your Peerform grade. The fee is subtracted from your loan funds before the money is disbursed.
Each loan lasts for three years, although there is no penalty for paying it off early. Personal loans may be used for many different purposes, such as weddings, home improvement projects, medical expenses, and moving expenses.
Debt consolidation is the most popular loan type amongst Peerform borrowers; however, it’s important to make sure you’re actually saving money on your payments and interest before taking this route.
Peerform doesn’t list too many requirements for borrowers. You’ll need a minimum credit score of 600 to qualify, in addition to at least one year of credit history. You don’t have to make a certain amount of money, and you’ll just need your debt to income ratio to be under 40%.
That being said, those bare minimum requirements don’t necessarily reflect Peerform’s typical borrower. In fact, the average borrower has a credit score of 665 and earns $85,000 a year. The average DTI is also much lower than the maximum, coming in at 19.3%. Peerform states that it targets borrowers with credit scores in the mid-600s, which is still below the national average of 687.
Before beginning the application process, Peerform allows you to check your rate with a pre-approval form. This step is a bonus because the lender does not perform a hard credit check at this point in time. Once your loan is actually approved, a hard check will be performed to confirm your credit information.
After formally applying, you can pick your terms and monthly payment amount from a variety of loan options. Your loan is then listed on the marketplace platform to get funded by investors.
While that’s happening, you’ll need to verify your identity by providing copies of a few documents like your driver’s license, bank statements, and pay stubs. The entire process can take anywhere from three business days to a full two weeks. Keep this in mind if your funding needs are time-sensitive.
Once You’re Approved
After your funds are disbursed and you start making payments, you should be aware of a few different fees you could incur. First, there is a $15 unsuccessful payment fee for any payment that is returned. You can also be fined for late payments.
A late fee is charged after your payment is 15 days overdue. The amount is either 5% of the amount due or $15, whichever is more. There’s also a $15 processing fee each time you pay by check. All of these fees are pretty typical of most lenders, although the exact amounts vary.
Finally, take care to keep your account up to date. If it goes to a third-party collection agency, you could be responsible for a collection fee up to 33% of all sums collected on a claim. Peerform does report payments to TransUnion, so you can improve one of your credit scores by making on-time payments.
Peerform prides itself on focusing on near-prime borrowers with less-than-perfect credit rather than prime borrowers with excellent credit. By using a unique algorithm, the P2P lender has the ability to better judge your creditworthiness rather than relying solely on your FICO score.
While many lenders use a top-down approach starting with your credit score, Peerform looks at many factors to determine whether or not you’re statistically likely to repay the loan. This is how the lender successfully selects qualified borrowers with lower credit scores.
Peerform got its start in 2010 and was founded by former Wall Street executives. The goal was to create a place where individuals could receive access to credit while taking advantage of low interest rates. Banks weren’t lending at the time due to the financial crisis, so Peerform helped fill a gap in nontraditional lending.
It has been making personal loans consistently since 2014 and is now focused on acquiring institutional lenders to fund whole loans, rather than individual investors spreading out their portfolio across many different loan fractions.
What to Know Before Getting a Peerform Personal Loan
So, think you’re ready to apply for a Peerform personal loan? Follow these tips to make a sound financial decision and strengthen your chances of approval during the application process.
Take a look at your finances.
Before applying for a Peerform loan, or really any personal loan, get your finances in the best shape you possibly can. That doesn’t necessarily mean you have to wait months and months for your credit score to bump up a few points. But there are some tweaks you can make now that can produce quick results and potentially help you qualify for that loan.
First, look at your debt to income ratio. It might sound complicated, but it’s really a quick and easy equation that shows you how lenders view your ability to repay a loan.
Start by adding up all of your monthly debt obligations (like your mortgage, car payment, student loans, and credit card minimums), then divide that number by your gross monthly income (that’s the amount you earn before taxes, health insurance, and other withholdings are taken out).
The number you get is your debt to income ratio. So if your monthly debts total $2,000 and your gross monthly pay is $5,000 then your debt to income ratio is 40% — that’s right at Peerform’s required maximum. See if you can get that number a little lower by making a lump sum payment on a credit card.
This is also a good time to check your credit report for inaccuracies and potentially even check your credit score. Order all three credit reports for free and go through them with a fine-tooth comb. You’ll have to pay to see your FICO score unless you can get them for free through a credit card or other offers.
That information is helpful in getting an accurate pre-approval from Peerform because you’ll need to enter in your general credit score range. Some websites offer free educational credit scores but don’t use the exact algorithm used by FICO.
Get your paperwork in order.
As soon as you begin to think about applying for a personal loan, start gathering all of your important financial documents. This can help speed up the approval process, especially if you’re in a time crunch to receive the funds.
Collect your last few pay stubs and dig out those tax statements from the last couple of years. You may not need everything you find, but you’ll be glad to have it all on hand once you get the request for income and employment verification.
Find the best offer.
Peerform is one of the best P2P lenders for bad credit loans. But it still never hurts to ask around for the best offer. Compare different types of lenders, such as traditional financial institutions and alternative online lenders, to see what you can qualify for.
Many lenders like Peerform only perform soft credit checks during the pre-approval process, so there’s no impact on your credit score. Just check to make sure that’s the case before you apply for several different pre-approvals.
If you already have bad credit, having your score take a dip of 10 to 20 points can be a big deal. This is especially true when dealing with a lender like Peerform because your overall financial grade falls into set categories with corresponding interest rates. Save yourself time and money by completing those pre-approvals in a strategic manner that minimally affects your credit score.