Getting Debt Under Control in 2015
February 7, 2015 9:56 AM   Subscribe

Has anyone had any experiences using a peer-to-peer lending service such as Prosper or Lending Club? I'm considering one of these as an option to get a credit card under control. I've done a bit of research and it seems like an appealing option to me.

The last questions on mefi were back in 2005 and 2007 so I'm wondering if anyone has any experiences with either of these (or one I may not even know of) to share.

Also, does a peer-to-peer loan affect credit rating any different from a personal loan? I have excellent credit, not necessarily in any financial peril, but recognize if I don't wheel in this particular card I have, it could cause problems for me in a year or so.
posted by punkrockrat to Work & Money (7 answers total) 4 users marked this as a favorite
 
My experience: Out of curiosity I got an APR quote from Lending Club for the same reason a year or so back. I have good-but-not-excellent (mid-high 700s) credit, and the APR was about 5% higher than the credit card, which is the highest rate card I have. I really only did it to see if I could both shave some points and disincentivize using it, which it seems like are your goals as well. Instead, I decided to just stop carrying it.
posted by supercres at 10:01 AM on February 7, 2015 [1 favorite]


I looked into a Prosper loan at some point. Like superacres, for me it ended up a non-starter. I still get emails from them, and went and checked it out a second time at a later date, and it was again a non-starter. I no longer remember the exact reasons as to why it wouldn't fly.

I will suggest this: You can't borrow your way out of debt. It's nice if you can get a lower interest rate to cut the cost of the loan or get a consolidation loan to ease cash flow stress if you are getting in over your head. But if neither of those are the case, then the solution to too much debt is to learn to live within your means and stop whipping out the credit card. (Actually, that's always the real solution. I am just acknowledging that there are cases where debt management makes a critical difference.)

Best of luck.
posted by Michele in California at 10:28 AM on February 7, 2015 [3 favorites]


I'm shoveling out of debt too. Just keep attacking it. I'm beginning to see the light at the end of the tunnel and it feels great!

I'm using the debt snowball and it's so awesome when you pay one off completely.

Also, I will not be buying another house.
posted by Ruthless Bunny at 11:08 AM on February 7, 2015


One of the best ways to manage credit card debt is to be aware of the cost of it over time. This Debt Reduction Calandar on Google Docs is what I use. When I am tempted to make a large purchase while still carrying debt I put the numbers in and see how much it changes my debt repayment over time and total interest payment costs. It is a pretty good way to stop spending frivolously.

It is also useful for helping you decide if moving debt to a lower debt is worth it (the transfer fees and such can often negate any interest savings).

I'd suggest looking for a credit union and a personal loan instead or maybe finding a new low interest card that offers an interest free or low interest transfer.
posted by srboisvert at 12:02 PM on February 7, 2015 [4 favorites]


I don't know that much about "peer-to-peer" lending, but from what I'm hearing about the rates, it sounds like a last resort for people with bad credit.

Why not a loan from a bank or credit union, or another credit card with 0% intro rate balance transfers, if your credit is excellent? Obviously you can't "borrow your way out of debt" in a blindingly literal sense, but you can use your good credit to pay little or no interest instead of high interest.
posted by drjimmy11 at 12:05 PM on February 7, 2015


Thanks for the advice everyone. It really comes down to shopping for a better rate - and really choosing the best option among all of all evils. Peer-to-peer lending seemed to be an option I recently just learned of and was interested in what other folks experiences have been with it. I've gotten a *lot* smarter with my money finally over the last few years, but I've had this once card that has just been a drag since i get it in college many, many moons ago.

Looks like I am leaning towards a balance transfer to a much better rate through my credit union now - as they are offering me something good. Plus with my credit union, it's still small enough that I get to deal with people are are actually *nice* and seem to somewhat give a shit about me a lot more than some huge, horrible bank.
posted by punkrockrat at 12:38 PM on February 7, 2015


Now just be sure and avoid loan 'insurance' because that is just a rip off.
posted by srboisvert at 2:36 PM on February 7, 2015


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