Peerform is a peer-to-peer lending platform that was founded in 2010 by Mikael Rapaport and is based in New York City. Peer-to-peer marketplaces, such as Peerform, Lending Club and Prosper, don't actually lend money directly. Instead, they connect individual investors with borrowers. Peerform failed to get enough traction to be a serious alternative to the two big name in peer-to-peer lending when it was first launched but has recently changed the model it uses to assess eligibility and is becoming the peer-to-peer option for borrowers who don't have great credit. It also markets itself as a better deal for investors with a reported return rate of 9.88% in 2014. Prosper, for instance, reported a 6.87% return in the same period.
Peerform provides a marketplace to connect investors and financial institutions with borrowers. It is similar to service offered by Prosper and LendingClub. However, Peerform has a less stringent eligibility criteria and offers fixed rates while even considering borrowers with low credit scores (minimum FICO score of 600). Other peer-to-peer platforms require a score of 640 and higher.
Borrowers must first create an account and provide basic information, such as their name, address and salary. Peerform analyzes this information and performs a soft-pull on your credit. This allows borrowers to get a loan rate and eligibility assessment without taking a hit on their credit. Once a borrower is approved the loan application is listed on Peerform's database to await investors willing to fund it. Funding can take one to 14 days to process. If not enough investors are willing to fund the loan, the application is removed after 14 days. All loans are made by Cross River Bank, a New Jersey chartered bank that is insured by the FDIC and that also processes the loans for other peer-to-peer lenders, such as Able Lending.
Rates range from 7.12% APR to 29.99% APR and are fixed during the life of the loan. There is also a 1% to 5% origination fee, which is included in the APR rate but is deducted in a lump sum from the loan. So if you need a specific amount of cash, make sure you take into account the origination fee. Borrowers are categorized by their credit profile and assigned a Peerform grade ranging from AAA to DDD. Borrowers with an AAA grade qualify for the lowest rates.
Loan amounts with Peerform range from $1,000 to $25,000. The low minimum balance is an advantage for people who only need a small loan. However, unlike other online lenders that offer up to 5-year terms, Peerform only offers a 3-year term, which can bring up the monthly payments of larger loans. On the other hand, there are no prepayment penalties, so borrowers are not charged additional fees for making extra payments or paying off the entire balance early.
Peerform accepts investors from all 50 states but its loans are only available to residents of Alaska, Alabama, Arkansas, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin.
Peerform's has an entirely online application form that is fast and easy to complete. However, loan approval depends on how long it takes investors to fund a loan, which could take as long as two weeks. Once borrowers provide their personal information and choose a loan amount, they must upload a driver's license, passport or other official ID to verify their identity. Borrowers need to have a credit score of at least 600, a debt-to-income ratio below 40% and no bankruptcies, tax liens, judgements or current delinquencies on their credit history.
Peerform has a fast and easy application process and gives borrowers a fixed rate, which means monthly payments don't change. This allows borrowers to budget better and know exactly how much the loan will cost. Rates are competitive although a little higher than Prosper and Lending Club. This is the tradeoff of having less stringent eligibility requirements and allowing borrowers with credit scores as low as 600 to apply. Peerform also has a lower minimum loan amount: just $1,000 and gives borrowers a rate offer without requiring a credit check.