Although peer-to-peer lending (P2P) has existed since 2005, it has quickly become popular. P2P lending is when an individual borrows money from other individuals, directly, without banks or financial institutions as intermediaries. There are many websites today that connect borrowers with investors. In this article, we're going to review a very popular one – Peerform.
The Peerform marketplace lending platform was founded in 2010 by Wall Street executives. It enables people with fair credit or limited credit history to obtain several types of personal loans (debt consolidation, installment loans, car financing, etc.). At the same time, it offers investment opportunities to those interested to include P2P lending in their portfolio. In order to apply for a loan, you need a FICO credit score of at least 600. Your loan will get placed on the platform’s lending marketplace, where investors can see it and decide whether they want to fund it.
At Peerform, you can apply for the following types of loans:
- Debt consolidation: If you’re struggling with debt and, on top of that, have bad credit - you should consider this type of loan. With Peerform’s debt consolidation loan, you can combine all your debts (credit card, medical bills, etc.) and pay them all off with a single monthly payment.
- Installment loan: You can get an installment loan for whatever purpose and amount you need. This type of loan can especially be helpful when you’re hit up with an unexpected expense. It’s great because you apply for the loan online, and Peerform claims your online application can get processed quickly.
- Wedding loan: Is planning the most important day in your life giving you headaches? You have no idea how to afford all these expenses without spending all your savings. Apply for a Peerform wedding loan and enjoy your wedding day in peace.
- Home improvement: When applying for a home improvement loan with Peerform, you don’t need collateral or a perfect credit score. You can use it for all kinds of home improvement projects.
- Medical expenses: Medical expenses can be a nightmare. The Peerform loan can help you cover all those medical bills and give you three years to pay them off.
- Moving and relocation: Moving is always a big change and can be very stressful. Luckily, Peerform offers a loan for moving and relocation, so at least you won’t have to worry about the costs at that moment.
- Car financing: Buying a car is a big decision that requires some research. Once you find the one you want but can’t afford it, you can get financing help at Peerform by applying for a personal auto loan.
In addition to the above mentioned, there’s one more type of loan offered by Peerform. Its specifications slightly differ from those for the other loans:
- Consolidation Loans: A consolidation loan enables you to combine all your debts into one loan. It simplifies your finances because now you have to make only one monthly payment instead of several of them. More importantly, this loan will have a lower average rate than the highest rate you’re paying currently. Peerform offers consolidation loans too, intended to help you pay off your high-interest credit card debts. This program is available only by invitation, and the loan amounts range from $4,000 - $25,000.
You can apply for the following types of loans: debt consolidation, installment loan, wedding loan, home improvement, medical expenses, moving and relocation, and car financing.
|APR||5.99 - 29.99%
|Amount||$4,000 - $25,000
|Term||3 - 5 years
|Origination fee||1 - 5%
As you can see from the table the maximum loan amount is $25,000, and the APR starts at 5.99% for the best graded borrowers. The loan period varies from 3 to 5 years.
|Origination Fee||1 - 5%
|Unsuccessful Payment Fee||$15
|Late Fee||5% or $15 (whichever is greater)
|Check Processing Fee||$15
- Origination Fee: A loan origination fee is a fee that is charged by the lender for processing your application. Peerform will charge you an origination fee only if the loan is issued. This fee is calculated in the annual percentage rate (APR), and it will be deducted from the loan amount. For example, for a $10,000 loan with a 5% origination fee ($500), you will get $9,500 on your bank account.
- Unsuccessful Payment Fee: Whenever an automatic payment from your account is rejected an unsuccessful payment fee will be charged. That could happen if your account has been closed or suspended or if you don't have enough funds in it.
- Late Fee: You can be 15 days late with your payment without incurring a late fee. After that, you’ll have to pay a fee of 5% of the monthly payment amount or $15, whichever amount is greater.
- Check Processing Fee: You can choose to make your payments by direct debits through your bank account or a check. If you go for check payments, be aware of the $15 check processing fee.
Peerform Personal Loan: Pros and Cons
|Available to people with fair credit.You can qualify for a Peerform loan with a credit score of 600.
||Reports to only one major credit bureau. There are three major credit bureaus, but Peerform reports to only one of them, TransUnion. That will make building credit a bit harder.
|Low rates.Peerform offers great rates in comparison to most P2P online lending platforms, with an APR of only 5.99% for the best-graded borrowers.
||Loan terms.The loan terms are not flexible - you can neither choose nor change your payment date. Also, there’s only one loan term available – 3 years (except for consolidation loans).
|Prequalification. You can prequalify for a loan and see the loan terms you will be offered. There will be just a soft inquiry on your credit reports, which means it doesn't affect your credit score.
||Fees.Peerform charges four types of fees – origination fee, unsuccessful payment fee, late fee, and check processing fee.
|No prepayment fee. Peerform doesn't charge a prepayment fee, so, you can pay off your loan sooner without additional costs.
||Poor loan amount range. The minimum amount one can borrow is $4,000, which is too high and not suitable for smaller expenses. The maximum amount is $25,000, which is too low and might not be enough for some bigger purchases.
Applying for a Peerform Loan
You can prequalify for a Peerform loan online, therefore, check which loan terms you’ll be offered without actually applying. You can then decide whether those terms are acceptable for you and if yes, you can proceed to apply. In general, these are the requirements, according to Peerform’s site:
- A minimum FICO credit score of 600.
- A debt-to-income ratio below 40% - mortgage debt excluded, and this will be calculated based on your two most recent pay stubs and tax documentation.
- There can’t be any current delinquencies, recent bankruptcy, tax liens, judgments, or non-medical related collections in your credit profile, in the last 12 months.
- At least one open bank account.
- At least one revolving account ever opened.
Peerform will first do only a soft inquiry credit check, which will not show up in your credit reports and won't affect your credit score. A hard inquiry will be done in the final phase of the loan before you receive the loan proceeds.
Peerform Personal Loan Compared to Competitors
Let’s see where Peerform stands in comparison to other P2P online lending platforms.
| Peerform || Lending Club || Upstart |
|APR range|| 5.99 - 29.99%
|| 7.04 - 35.89%
|| 3.5 - 35.99%
|Loan amount|| $4,000 - $25,000
|| $1,000 - $40,000
|| $1,000 - $50,000
|Loan term|| 3 - 5 years
|| 3 - 5 years
|| 3 - 5 years
|Minimum credit score required|| 600
|Origination fee|| 1 - 5%
|| 3 - 6%
|Other fees and features|| unsuccessful payment fee ($15); late payment fee (5% of the amount, or at least $15); check processing fee ($15);
|| unsuccessful payment fee ($15) and late payment fee (5% of the amount, or at least $15); you’ll receive funds as soon as 4 days;
|| ACH return ($15) and late payment fee (5% of the amount, or at least $15); fast funding and flexible payments;
It’s evident from the table that, when it comes to interest rates, Peerform is a definite winner with a low starting rate of 5.99%. You won’t pay a higher APR than 29.99%, as opposed to the competitors whose rates go as high as 35.99%. Additionally, it has the lowest origination fee, potentially being the least costly lending platform out of the three. However, its loan amount range is somewhat limiting and inconvenient. Both competitors allow for a $1,000 loan amount, which is great for small expenses. While the loan terms are the same with all three lending platforms, Peerform seems to have one fee too many since both competitors have only two additional fees instead of three. Finally, both competitors guarantee fast funding, and Upstart also offers flexible payments, two features where Peerform falls short.
Peerform offers competitive rates to fair credit borrowers and has several loan options. However, it comes with many drawbacks too. Considering this is a platform targeting people with fair credit who might not get a loan through traditional channels, we find three things problematic.
First, the inflexible loan terms. These people are not in the best financial shape, and they should be given some breathing space, for example, to at least choose or change their payment date. Also, to have more options about how long they will pay off their loan. Peerform has only two options: 3 - 5 years. Shorter terms allow you to pay off your debt with less interest, while with longer terms, you'll have smaller monthly payments.
Moreover, since borrowers hope to improve their credit score and with it the terms of any future loans, it doesn’t do them much good that Peerform reports only to one credit bureau.
Another thing we don’t like is the fees. There are too many of them to keep track of and can easily pile up. Still, for those with limited options due to little credit history or lower credit score, Peerform is an okay option.
Is Peerform legit?
Yes, Peerform is a legitimate, peer-to-peer lending platform.
When will I get funding?
Unfortunately, you can’t know that. You’ll have to wait for investors to fund your loan, so it might take a while to get funding. Even then, it is not disclosed on Peerform’s website how long it will take for the borrowers to receive the loan on their bank account. This information might be available from customer service representatives, which you can reach at the following number: 1-800-338-8049
Does Peerform offer debt refinancing loans?
At the moment, Peerform doesn’t offer refinancing.