So you’ve found yourself a university that you really want to get into but are having trouble figuring out how to pay for your education? The Internet may hold the key to your getting a degree. These days, the Internet offers more than just homework help to students.
Online social lending sites are gearing some of their services to students in need of financial aid. And while this is a fairly new practice, it is worth taking a look at if only to have more back-up options in case other sources don’t pan out.
The Pros of Online Lending Sites
There are quite a few legitimate online lending sites that help students with their financial needs. These are some of the more popular ones.
- lendingclub.com – This site lets borrowers get loans of $25,000 and under. The interest rate hovers around 0.75-2%, which they’ll peg judging by your credit rating.
- prosper.com – Prosper lets borrowers take out loans from $1,000 to $25,000 (The typical Prosper loan is $7,000). The interest rate varies between 1-2%.
- virginmoneyus.com – It usually takes Virgin Money one to three days to facilitate transactions. The average interest rate on loans is 6.5 percent.
- zopa.com – Zopa doesn’t charge transaction fees and turnaround is also fast.
These online lenders work differently to raise the money for your loan. Virgin Money, for instance, are more suited towards family loans. Prosper, on the other hand, auctions your preferred loan amount and interest rate, and lenders bid to get your business. This is a great way to finance your education, as interest rates of under 6% aren’t uncommon.
Lenders are able to promote their services as well as expect to earn a respectable profit out of these transactions. There is also the added “feel good” factor of being able to assist a student in getting an education.
The Cons
Like most other loans, online lending sites have disadvantages. For one, students aren’t guaranteed the loans. Some lenders may charge higher fees than others. Some payment terms may also hurt the unsuspecting student in the long run. It’s important to know what you’re getting into before signing the dotted line.
Where to Go from Here?
Online lenders are still on the rise, so it’s still probably a better idea to take out a federal loan first. There are many federal loans geared towards students out there, and most have acceptable interest rates.
If you do decide to borrow money from online lenders, make sure to evaluate all the sites just as thoroughly. If you have questions or are in need of clarification, then by all means, get in touch with officials from these online lending firms to get a clearer view of your choices.
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