Instead of being tied to a bank for loans you can now turn to regular people to help you get the funding you need. Peer to peer lending is also helping the everyday investor diversify their portfolio and earn high interest in the process.
With the popularity of P2P lending more platforms offering this service are starting to pop up. One that has recently caught our eye is Upstart.
What is Upstart?
Upstart is a P2P lending company launched in April of 2012 by former president of Google Enterprises, David Girouard.
Girouard and his two business partners saw a problem with the lending market. There were young professionals who had no credit and were denied by traditional banks. Feeling that these young professionals and young entrepreneurs would be good credit risks Girouard formed Upstart.
Although Upstart certainly aims for young professionals with thin credit profiles, they provide loans to people of all ages.
How it Works: For Borrowers
Upstart wants to help people with a thin credit history. They believe there’s more to a good borrower than just a credit score.
In fact, Upstart heavily weighs your education when considering your loan application.
Here are the full requirements to become a borrower:
- be a U.S. citizen, or permanent resident currently living in the US
- be at least 18 years old;
- have a valid e mail account;
- have a verifiable name, date of birth and social security number;
- Graduated from a 4 year accredited institution or graduating in the next 6 months; or Accepted to a partner bootcamp starting within 3 weeks and seeking employment after graduating from the bootcamp
- have a full time job, a full time job offer starting in 6 months (except if have been accepted to a partner bootcamp), or another source of regular income.
- have an account at a U.S. financial institution with a routing transit number; and
- meet the minimum credit requirements.
The APR’s range between 6.68% – 21.99% depending on a variety of factors.
You can check and see what interest rate you qualify for by filling out this application. There is no commitment to do so.
How it Works: For Investors
If you’ve previously used a P2P lending platform like The Lending Club or Prosper you’ll find that Upstart works similarly.
As an investor you can create an account and then browse through the available borrowers. Borrower’s profiles will look something like this:
You can then choose which applicants you want to lend money to and how much you would like to lend. You can go on the safe side and earn a smaller return or you can bet on the riskier candidates for larger returns. It’s up to you.
There are no fees to get started and if one of the loans you invested in gets defaulted on Upstart will return the origination fee. They don’t make a dime off of defaulted loans.
Is Upstart a Good P2P Option?
Investing with Upstart can be a great addition to your portfolio. Instead of looking only at credit scores and credit history Upstart pays special attention to the education, career field, and current income of borrowers.
This definitely a platform to try for investors and borrowers alike.
Have you tried Upstart?