Peer-to-peer Lending

Peer-to-peer Lending Options for Students

Is peer-to-peer lending safe?

Going to college is necessary for this day and age if you hope to get a good-paying job. However, finding the money to do so isn’t always easy. One method of getting money for college is to take out a student loan from the government. Another is to go to a private lending institution, such as a bank or credit union. A third method, and one that is becoming more and more popular, is to get a loan from a private individual. This type of loan is usually called peer-to-peer (P2P) lending. Following are a few options for students who are seeking a peer-to-peer loan.

What Is Peer-to-Peer Lending?

Peer-to-peer lending is essentially a financial agreement that takes place between individuals. One party, you, borrows money from someone else. It works the same way as a traditional loan because unlike a scholarship, grant, or gift, you will be expected to pay the money back, on time, and with interest tacked on. You and the lender agree on how much will be paid back with each installment, including the amount of interest that will apply.

How a Peer-to-Peer Loan Works

A peer-to-peer loan can be as simple or as complex as the involved parties want to make it. Some P2P loans are nothing more than one person handing over a check to another based on nothing more than a handshake or a promise to pay the money back. Other peer-to-peer loans are much more formal – they would be a legally binding contract that is signed by both you and the lender.

A peer-to-peer loan usually has all the same types of ramifications as a traditional loan – if the money isn’t paid back according to the terms of the agreement your credit rating could suffer, and you could also be sued for breach of contract or nonpayment. The terms of the loan are usually dictated by the lender and then you choose whether or not to sign the contract. For a person borrowing money for a college education, the transaction is usually more of the official variety, unless the money comes from a family member or close friend.

At times a peer-to-peer loan can be nothing more formal than borrowing money from Uncle Fred or Aunt Betty. You accept the loan graciously and agree to pay them back as soon as you can. If you don’t have a rich relative you still have the option of taking a more traditional approach by taking out a formalized peer-to-peer loan. Most people who opt for a P2P loan do so because they don’t have good credit, or simply want the option of paying off the loan as quickly as possible.

Where Can You Get a Peer-to-Peer Loan?

If you’ve decided to forego the usual method of getting money for college and want to get a P2P loan, you should begin by talking to other students who have gone that route. Ask around campus or in your community–let people know you’re interested in taking out a peer-to-peer loan and are looking for contacts. Another way to find a peer-to-peer lender is to do a little research on the Internet. Websites, such as or, are designed to provide help in peer-to-peer lending.

Through these websites, you can get in touch with organizations or private individuals that are willing to lend money to students. Other websites that could be valuable in finding a peer-to-peer lender are and It would be a good idea to do thorough research before agreeing to a contract.

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