Best Peer-to-Peer Lenders For Bad Credit 2022

ElitePersonalFinance
Last Update: May 17, 2022 Loan Reviews Loans

While traditional lenders turn consumer deposits into loans, peer-to-peer (P2P) lenders use capital from investors. The P2P business model allows individuals and institutions to tailor their risk tolerances to borrowers’ credit scores, and the dynamic increases your chances of obtaining a loan.For example, borrowers with bad credit often incur higher APRs. This happens because the lower your credit score, the higher your perceived probability of default. However, since some P2P investors have higher risk tolerances than direct lenders, they’re willing to extend bad credit financing to potentially earn a higher rate of return. As a result, P2P lenders often extend financing when other companies won’t.

There are only a few bad credit P2P lenders in the marketplace, so your choices are slim. However, our bad credit personal loan guide reviews more than 20  lenders with APRs of 35.99% or less., and some don’t charge loan origination fees. Furthermore, if you have very poor credit, we also reviewed 25 alternative lenders that offer better products than payday loans. As such, you don’t need to settle for a 400% APR.

Our marketplace also lists dozens of products for borrowers with very bad and bad credit, Moreover, applying does not require a commitment and won’t impact your credit score. As a result, it’s prudent to shop around, and doing so increases your chances of landing the best deal.

The Best Peer-to-Peer (P2P) Lenders For Bad Credit 2022

Companies like Upstart and PayOff by Happy Money provide P2P loans that meet yours and investors’ objectives. Therefore, the business model satisfies both parties, and helps fill the void between traditional and alternative lenders. Moreover, our list also includes loan comparison sites, because they offer P2P loans on their platforms. However, some also provide standard personal loans and alternative loans, so their networks have a wide range of products.

Lender: Loan Amount: APR: Min. Credit Score: Best For: Type:
Even Financial $1,000 – $250,000 2.49% – 35.99% 550 Obtaining the best APR Connects to peer-to-peer lenders
PersonalLoans $1,000 – $35,000 5.99% – 35.99% 580 Short and long-term personal loans Connects to peer-to-peer lenders
Upstart $1,000 – $50,000 3.09% – 35.99% 300 Low credit scores, high DTI ratios Peer-to-peer lender
PayOff $5,000 – $40,000 5.99% – 24.99% 550 A stable credit history Peer-to-peer lender

Even Financial

Loan Amount: $1,000 – $250,000
APR: 2.49% – 35.99%
Min. Credit Score: 550
Approval: 1 – 7 Days
Terms: 2 – 7 Years
Fees:
  • Loan origination fees vary by lender
  • Late payment fees vary by lender
  • Most lenders don’t charge prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 550
  • The maximum DTI ratio is often 43%
  • Have recurring employment income or government benefits
  • Fill out your information through Even Financial’s online portal
Average Borrower Profile:
  • Even Financial connects borrowers with personalized financial product offers from banks and other lenders
  • If you have bad, fair, good, or excellent credit, financing options are available
Best For: Obtaining the best APR
Check rates

Since Even Financial is not a direct P2P lender, you may be wondering why the company is at the top of our list. Well, it’s because Even Financial is one of the best loan comparison sites that partners with more than 300 of the largest lenders in the U.S. Moreover, the most reputable P2P lenders operate on Even Financial’s platform, so a simple sign-up allows you to browse several P2P loans in one place instead of having to go to multiple websites. In addition, there are no fees to use the service, and inquiring won’t impact your credit score. As a result, you have little to lose by giving Even Financial a try.

Even Financial also partners with several companies that offer bad credit solutions. And since there are only a few P2P lenders that cater to borrowers with poor credit, the loan comparison site provides more options. For example, Even Financial partners with OneMain Financial, NetCredit, and OppLoans, so alternative products for very bad credit are attainable.

The minimum credit score to qualify is 550, and Even Financial’s search function allows you to curate results to your unique borrower profile. As a result, you’re only shown products that have the highest chance of approval.

Lenders on Even Financial’s platform offer $1,000 to $250,000, with APRs of 2.49% to 35.99%, and terms of two to seven years. And since they compete for your business, you may uncover unadvertised promotional offers that aren’t listed on lenders’ websites. Even Financial can also help you obtain lines of credit, debt consolidation loans, and student and auto loan refinancing.

Pros:

  • Lenders on Even Financial’s platform offer $1,000 to $250,000.
  • Competitive APRs range from 2.49% to 35.99%.
  • Even Financial’s search function makes it easy to find affordable loans.
  • Even Financial’s services should be available in all states.
  • Checking your rate won’t impact your credit score.

Cons:

  • Fees and charges vary by lender.
  • Multiple offers can make it difficult to choose the best loan.

The impact of COVID-19:

Since Even Financial is a comparison site, it doesn’t issue loans directly. Moreover, the lenders on Even Financial’s platform determine their deferral and forbearance policies independently. As a result, you need to contact your lender directly to determine the available options.

PersonalLoans

Loan Amount: $1,000 – $35,000
APR: 5.99% – 35.99%
Min. Credit Score: 580
Approval: 1 Day
Terms: 90 Days – 6 Years
Fees:
  • Loan origination fee of 1% – 5%
  • You may incur late payment fees after 15-day grace period
  • Most lenders don’t charge prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 580
  • The maximum DTI ratio is often 43%
  • Have recurring employment income or government benefits.
  • Do not have a pattern of late payments, bankruptcies, or charge offs
  • Fill out your information through PersonalLoans’ online portal
Average Borrower Profile:
  • PersonalLoans connects borrowers with personalized financial product offers from banks and other lenders
  • If you have bad, fair, good, or excellent credit, financing options are available
Best For: Short and long-term personal loans
Check rates

PersonalLoans is a comparison site that partners with P2P lenders. Its large network also helps you obtain personal installment loans, and bank personal loans. Lenders on the platform offer $1,000 to $35,000, with APRs of 5.99% to 35.99%, and terms of 90 days to six years. You can apply in minutes, and qualified applicants are shown a list of suitable options. PersonaLoans notes that most borrowers apply for P2P loans “due to lower rates.” However, the site has products for most credit scores, so borrowers with bad credit can still apply.

PersonalLoans has a minimum credit score requirement of 580 for standard personal loans. However, you need a minimum credit score of 600 to qualify for P2P loans. You also need to be employed or self-employed with a minimum income of $2,000 per month. Also, please note that lenders’ loan origination fees range from 1% to 5%.

Pros:

  • Lenders on PersonalLoans’ platform offer $1,000 to $35,000.
  • Competitive APRs range from 5.99% to 35.99%.
  • PersonalLoans’ search function makes it easy to find affordable loans.
  • PersonalLoans’ services should be available in all states.
  • Applying does not impact your credit score.

Cons:

  • You incur a loan origination fee of 1% to 5%.
  • Late payment fees vary by lender.

The impact of COVID-19:

Since PersonalLoans is a comparison site, it doesn’t issue loans directly. Moreover, the lenders on PersonalLoans platform determine their deferral and forbearance policies independently. As a result, you need to contact your lender directly to determine the available options.

Upstart

Loan Amount: $1,000 – $50,000
APR: 3.09% – 35.99%
Min. Credit Score: 300
Approval: 1 – 7 Days
Terms: 3 – 5 Years
Fees:
  • Loan origination fee of 0% – 8%
  • Late payment fee of 5% of the amount due, or $15, whichever is greater, after a 15-day grace period
  • Insufficient funds fee of $15
  • Paper documents fee of $10
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 300
  • Have a DTI ratio that doesn’t exceed 45% to 50% (excluding rent/mortgage)
  • Have not filed for bankruptcy in the last 12 months
  • Have no current delinquencies on your credit profile
  • Have less than six credit inquiries on your profile in the last six months (excluding mortgages, auto and student loans)
  • Have recurring employment income or government benefits
  • Fill out your information through Upstart’s online portal
Average Borrower Profile:
  • Borrows roughly $8,600.
  • Incurs an APR of 23.98% on a five-year term
  • Achieves approval nearly twice as often than traditional lenders with a FICO Score of 620 to 660
  • The CFPB found Upstart’s AI risk model approves 27% more borrowers and they incur APRs 16% lower than traditional lenders
Best For: Low credit scores, high DTI ratios
Check rates

Upstart is a P2P lender that lets you borrow $1,000 to $50,000, with APRs of 3.09% to 35.99%, and terms three to five years. The minimum credit score to qualify is 300, and applying won’t impact your credit profile. Upstart’s technology is unique because the company uses artificial intelligence (AI) and alternative data to assess credit risk. Metrics like your education and job history carry more weight in the analysis, and these variables can help offset a low credit score. As a result, Upstart is one of the best P2P lenders for bad credit.

Loan minimums vary by state, with Georgia ($3,100), Hawaii ($2,100), Massachusetts ($7,000), New Mexico ($5,100), and Ohio ($6,000) having higher floors. Upstart’s disclosures also state that the average APR for a five-year loan is 23.98%.

In addition, loan origination fees range from 0% to 8%, and late payment fees of 5% of the amount due, or $15, whichever is greater, often apply. The company’s insufficient funds fee is  $15, and its paper documents fee is $10 per request.

Pros:

  • Upstart offers P2P loans of $1,000 to $50,000.
  • Competitive APRs range from 3.09% to 35.99%.
  • You can repay the funds over terms of three to five years.
  • Upstart’s use of AI and alternative data increases your chances of approval.
  • Borrowers in all states should be able to apply.
  • Applying does not impact your credit score.

Cons:

  • You incur a loan origination fee of 0% to 8%.
  • You incur a late payment fee of 5% of the amount due, or $15, whichever is greater.
  • A $15 insufficient funds fee may apply.
  • A $10 paper documents fee may apply.
  • There are higher loan minimums in some states.

The impact of COVID-19:

If you need to pause your loan payments because of the pandemic or due to other financial difficulties, you can submit an online request through Upstart’s website. In addition, you can also call the lender at 1-855-451-6753.

PayOff by Happy Money

Loan Amount: $5,000 – $40,000
APR: 5.99% – 24.99%
Min. Credit Score: 550
Approval: 1 – 7 Days
Terms: 2 – 5 Years
Fees:
  • Loan origination fee of 0% – 5%
  • There are no late payment fees
  • There are no application fees
  • There are no prepayment fees
Qualification Criteria:
  • Be at least 18 years of age
  • Have a credit score of at least 550
  • The maximum DTI ratio is often 43%
  • Have recurring employment income or government benefits
  • Have no current delinquencies
  • Have a credit history of at least three years
  • Fill out your information through PayOffs online portal
Average Borrower Profile:
  • Has a credit score of 710
  • Has $2,000 in cash flow per month
  • Has a DTI ratio of 40%
Best For: A stable credit history
Check rates

Happy Money is the parent company of PayOff and the two combine to offer bad credit P2P loans. You can borrow anywhere from $5,000 to $40,000, with APRs of 5.99% to 24.99%, and terms of two to five years. The minimum credit score requirement is 550, and there are no application, prepayment, or late payment fees. Moreover, loans send directly to creditors receive APR discounts of 0.25% to 1%. Therefore, PayOff is one of the best bad credit P2P lenders for debt consolidation .

Loan origination fees range from 0% to 5%, and you have to borrow at least $5,100 in New Mexico and $6,100 in Maryland. In addition, PayOff does not issue loans in Massachusetts or Nevada. Furthermore, you can’t have any delinquencies, and you need a credit history of at least three years to qualify.

Pros:

  • PayOff offers P2P loans of $5,000 to $40,000.
  • Competitive APRs range from 5.99% to 24.99%.
  • APR discounts are available for debt consolidation loans.
  • You can repay the funds over terms of two to five years.
  • There are no application, prepayment, or late payment fees.
  • Applying does not impact your credit score.

Cons:

  • You incur a loan origination fee of 0% to 5%.
  • You can’t borrow any less than $5,000.
  • You can’t have any delinquencies and you need a three-year credit history.
  • Loans are not available in Massachusetts or Nevada.

The impact of COVID-19:

PayOff’s parent company Happy Money has relief programs that can help borrowers dealing with COVID-19 disruptions or other means of financial hardship. To inquire about the available options, you can call Happy Money at 1-949-346-8740 or send an email to success@happymoney.com.

What Are Peer-to-Peer (P2P) Loans?

Within the traditional banking model, financial institutions borrow from depositors at low interest rates and lend at higher interest rates. The net-interest spread is a bank’s profit, and the institution aims to repeat the process as many times as it can without encouraging too many defaults. Similarly, online personal lenders partner with traditional banks, and while the Fintech companies approve and service the loans, your funds often flow to and from a brick-and-mortar institution.

Conversely, P2P lenders get their capital from an investment group, individual, or group of individuals. For example, a bad credit P2P loan can be funded by one or 100 (or more) investors, with each party owning a slice of the interest and principal payments. This allows P2P investors to diversify their risk across several P2P loans, while also helping borrowers obtain the financing they need. As a result, while P2P lenders still handle the approval process and service the loans, the real money flows between you and the P2P investors.

Can I Apply If I Have Bad Credit?

Yes. While there are only a few direct P2P lenders that offer financing to borrowers with bad credit, Upstart may provide the highest chance of success. The online lender has a minimum credit score requirement of 300, and its AI-powered algorithm places more emphasis on your education and job history than your credit score. As a result, new technology makes it easier for bad credit borrowers to obtain P2P financing and avoid payday loans.

Since P2P loans are funded by investors and not depositors, individuals can lend based on their own risk tolerances. For example, a risk-averse investor may only lend to borrowers with credit scores of 700 or more. Therefore, his underwriting standards are similar to traditional banks. In contrast, a risk-seeking investor may be willing to lend to borrowers with credit scores of 500 or more, believing that the higher potential return is worth the risk. And since investors with similar risk tolerances can pool their money together to fund bad credit loans, a hundred investors can lend $100 each and only risk a small amount of capital to provide a $10,000 loan. Conversely, a traditional bank has to lend the entire $10,000 from its deposit base, and that can be viewed as too risky.

All in all, P2P lenders make it easier for borrowers with bad credit to obtain affordable loans. And since applying won’t hurt your credit score, submitting multiple applications is the best way to obtain the cheapest rates.

Are Bad Credit P2P Loans Similar to Standard Personal Loans?

Yes. P2P and standard personal loans have similar uses and restrictions. For example, both products can’t be used to pay tuition or repay student loans, and gambling is most likely prohibited. Conversely, both P2P and standard personal loans help finance home improvement projects, medical emergencies, debt consolidation, automotive repairs, funeral expenses, vacations, weddings, and random emergencies like floods/acts of nature. As a result, both products have similar uses, restrictions, APRs, and terms, so our advice is to shop around and choose the loan with the lowest interest rate and origination fee.

Do Personal or P2P Lenders Approve More Bad Credit Borrowers?

It varies by lender. But under most circumstances, P2P lenders offer higher chances of approval. With direct lenders, they have stricter qualification criteria and often have standardized guidelines. And because of this, you may be disqualified if the lender uncovers red flags in your application. The reason for this is that personal lenders operate as a single entity. As a result, their capital comes from one place and it’s more difficult for them to diversify their credit risk.

Conversely, P2P lenders can slice up loans among several investors, which allows the latter to diversify their positions. Therefore, if an individual is uncomfortable with lending $10,000 to a high risk borrower, a group of lenders can share the credit risk and loan a few hundred dollars each. As such, this increases your chances of approval.

To that point, Upstart is a well-known P2P lender. And with a minimum credit score requirement of 300, the company helps connect you with investors that have higher risk tolerances. Thus, Upstart may be more willing to work with you than other lenders.

However, since applying often doesn’t hurt your credit score, the best strategy is to apply at multiple lenders. This includes direct lenders, P2P lenders, loan comparison sites, credit unions, and banks. By doing so, you can analyze multiple offers and choose the one that fits your needs.

The Pros and Cons of Bad Credit P2P Loans

As mentioned, bad credit P2P loans are similar to standard personal loans, so many of the same good and bad qualities are present.

Pros:

  • You can borrow a large amount.
  • APRs are lower than alternative loans and payday loans.
  • Repayment terms are longer than alternative loans and payday loans.
  • Minimum credit score requirements start at 300.
  • Bad credit P2P loans let you consolidate high-interest debt.
  • You can obtain a bad credit P2P quote in as little as a few minutes.
  • Some bad credit P2P lenders don’t charge loan origination fees.
  • Bad credit P2P loans are unsecured and don’t require collateral.
  • Repaying the loan on time helps rebuilt your credit.

Cons:

  • Only a few P2P lenders cater to borrowers with bad credit.
  • Standard personal loans often have higher borrowing limits.
  • P2P loans often have late payment and other fees.
  • Approval is not guaranteed.

Why Did We Select These Lenders?

While we analyzed more than 100 companies, only a few direct P2P lenders and loan comparison sites had minimum credit score requirements low enough to qualify as bad credit. Moreover, our guide focuses on personal loans, so we excluded alternative and cash advance P2P loans. However, if you click on the links, you’ll find exhaustive lists and reviews of different products that may fit your needs.

Conclusion

Bad credit P2P loans are innovative products that help borrowers avoid alternative loans and payday loans. Since several investors with high risk tolerances can fund a single bad credit borrower, P2P loans allow investors to diversify their risk. And in turn, the business model allows more bad credit borrowers to receive funding. Moreover, P2P loans are comparable to standards personal loans, and both products share many of the same great qualities. As a result, there is little reason to settle for payday loans given the bad credit options available in today’s marketplace.

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