I can hear you all yelling at me now. “Don’t go into debt!” “Don’t go into debt”. But what if you have a good reason to get a loan?
There are times, I think, when debt is useful. Some disagree, I know. But education, investing in a business, and reducing interest rates on credit card debt are, in my opinion, all sound reasons for a new loan. Problem is, sometimes these loans can be hard to get.
Student loans are available if you’re going to an accredited school full time. But what if you want to take a few night classes here and there or want to study a subject not taught at standard colleges?
Business loans, on the other hand, are nearly impossible to secure without proof of sales, a bulletproof business plan, or an Ivy League MBA. What if you just have a brilliant idea and need a few grand to try it out?
Finally, debt-consolidation loans are tricky to get because, if you’re in debt already, it’s hard to get more credit. That’s where Prosper comes in. Unlike conventional lenders, Prosper may be able to help you with your needs for an unusual loan, regardless of your credit. (For more on Prosper, read about what Prosper is or about my experience with Prosper).
Of course, the better your credit, the better your chances of getting a loan. If your credit’s hurting, you’ll just need to make a better case.
1. Alternative Education – Prosper is a great source for a loan for education or career training that may not be eligible for a standard student loan.
2. Small Business Start Ups – Need a few thousand bucks to get that business idea off the ground? Forget the credit cards. Try Prosper.
3. High Interest Credit Card Consolidation – This is what I did, and it was a lifesaver. While not as good as a 0% balance transfer, Prosper may be able to shave 5% – 10% off the interest rates you’re paying on a credit card balance.
4. Minor Home Improvements – If you’d rather leave your home equity alone or don’t need enough to justify taking out a line of credit, Prosper could do the trick.
5. Relocation Expenses – Ideally you’d have some savings if you have to move, but taking a small, fixed-term loan from Prosper, I would argue, would beat using a credit card where you could get a balance that might be neglected.
6. Prosper Arbitrage – I’m not sure I would try this, and I’m not sure how Prosper feels about it; but I do know there is a network of people on Prosper who use their excellent credit scores to take out low interest loans and then reinvest it in riskier, higher-interest loans on the site. Say you get a loan at 5% and re-loan at 18%. A 13% return is great, especially when you don’t put up a dime of your own. On the flip side, a borrower’s interest rate is 18% for a reason – there’s a lot of risk there.
Have you or someone you know gotten a Prosper loan for something else? I’d love to hear about it. In the meantime, learn more about Prosper yourself.
You can also read my 11 tips to help get your Prosper loan funded.
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