Social lending is a type of lending that revolves around individuals loaning money to each other. This type of lending has been used for many years and it is becoming more commonplace today with advancements in technology. Here are a few things to consider about social lending.

Social Lending

With social lending, you have a lender that is an individual with excess money. They have money to lend and they are willing to do so. There will also be a borrower that needs to borrow the money. The borrower will borrow a certain amount of money from the lender and then pay it back over time.

Social Lending Sites

Today, the majority of social lending takes place through social lending sites. These are websites that are designed to make social lending more accessible to individuals. With the majority of these sites, lenders and borrowers are going to be matched up. For example, a borrower will submit a request for a loan. They will provide all the information about what the loan is for and information about themselves. The website will then pull the credit file of the proposed borrower. Most of the time, the website is going to keep personal information from the lenders. They will give them a general idea as to how good the credit report is. Lenders will be able to look at the information about the loan and the borrower. 

The lenders will then be able to bid on the loan with other lenders. The bidding will start out at a particular interest rate and work its way down depending on how far the lenders are willing to go. The lowest bidder is going to get the loan. 

The lender will then give the money to the website and they will transfer it into the bank account of the borrower. Every month, a loan payment will be deducted from the bank account of the borrower and transferred through the website to the lender. Therefore, the website acts as a mediator between the two parties and makes it safe for everyone involved. If there are any disputes, the company will come in and try to settle it between both parties.


One of the big advantages of this type of loan is that it is easier to get approved for than a traditional loan. With this type of loan, you are going to be able to work with multiple lenders in order to get approved. Therefore, every lender is going to have their own standards and unless your credit is awful, you should be able to get someone to approve you. 


The terms of this type of loan can be negotiable. Many times, they will set it up as they fixed rate loan that has a payment every month. However, sometimes, the lenders will allow you to have flexible payments and terms. All of the terms will be disclosed prior to accepting a proposal from a lender. 

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