When you look at Peerform reviews you first need to understand the difference between conventional loans and peer-to-peer loans. While traditional loans come from a bank and can take months to get done, P2P loans are done through a platform that connects investors and borrowers.
Peer-to-Peer lending sites are rapidly becoming preferred destinations for both borrowers and investors. Peerform is a newer member of the P2P Market and it provides opportunities for both borrowers and investors to get better rates than what they can get from banks or other traditional loan and investment sources.
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Peerform was founded in 2010 by Wall Street executives with backgrounds in finance and technology. They started the platform because they realized that traditional lenders like banks seemed unwilling to provide loans for individual and small business owners.
The solution was to create a peer-to-peer lending platform that would bring both borrowers and loan investors together. This would also give investors an opportunity to earn much higher interest rates on their investments than what they could get through traditional bank investments like savings accounts, money market accounts, and certificates of deposit.
The platform is able to offer lower rates to borrowers, and higher rates to investors, because it lacks the physical infrastructure and employment base that banks have. The reduction in operating costs from running a technology-driven online lending platform could be passed on to both borrowers and investors.
Peerform is headquartered in New York City and has been featured in major media outlets, such as Time and The Street. Peerform is currently eligible to make loans to residents in the 36 following states: Alaska, Alabama, Arkansas, Arizona, California, Delaware, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Vermont, Washington, and Wisconsin.
Loans made on Peerform are underwritten by Cross River Bank, a federally insured New Jersey chartered bank and FDIC member.
Borrowing Through Peerform
The Peerform borrowing process is quick and simple, and you can use the loan proceeds for just about any purpose, including for business-related needs.
Here are the highlights of the Peerform lending process:
Loan purpose. Peerform makes personal loans that can be used for a wide variety of purposes, including debt consolidation, credit card refinancing, home improvement, major purchases, car financing, business purposes, medical expenses, moving and relocation, wedding expenses, vacation, home buying, or other needs.
They also have a category referred to as a “green loan”. That’s where you take a personal loan and use it to purchase alternative energy equipment for your home. This typically can be something like solar panels for heat and hot water, or even the generation of electricity.
Loan amounts. Peerform will make loans that range in size between $1,000 and $25,000.
Loan terms. All loans made through Peerform are for a term of 36 months. All loans are also fixed-rate, installment loans that will be fully paid off at the end of the term. Peerform does not offer any other loan terms at this time.
Minimum borrower qualifications. In order to qualify for a loan with Peerform, you must have:
- A minimum credit score of 600
- No delinquencies, bankruptcies, tax liens, judgments, or non-medical related collections in the past 12 months
- A minimum of one revolving account ever opened
- A maximum debt-to-income ratio (DTI) of not more than 40% (not including mortgage debt)
- A minimum of one open bank account
Although you don’t need to be employed, you do need to have an income which can be documented and verified. Also in regard to income, if you’re married, your spouse’s income cannot be used to qualify for the loan. Peerform provides personal loans, so you cannot include a cosigner for qualification purposes, nor make joint applications.
The loan application process. Peerform’s loan application uses a five-step process:
1. Registration – This is an online registration that you can complete within a few minutes
2. Personal loan selection – After completing the online registration, the platform will review your information, and offer loan terms or alternatives.
3. Personal loan listing – After you have selected the loan terms that you want, your loan request is listed on the platform so that it can be evaluated by potential investors.
4. Verification – You will be asked to submit documentation that supports the information that you supplied in your registration form, or that will be needed to verify your identity.
The loan registration process will ask you to provide basic information, such as the loan amount you are requesting, the purpose of the loan, your credit score range, your full name, address, phone number, date of birth, email address, and annual salary and wages. You will then be asked to create a password.
Once you complete the registration form, you will be informed immediately if you qualify for a loan, and what the rate for that loan will be. Again, all loans are for a term of 36 months.
If you accept the offer, your loan request will be placed on the platform for investors to review and consider if they want to invest in it. You will also be taken through a step-by-step process to complete your application. Making an application does not have any impact on your credit score.
Identity verification will involve you uploading copies of one of the following: your driver’s license, military ID with photo, passport with photo, or US federal or state government ID. You will also be asked to verify your income. This will include two recent pay stubs, but they may also request recent tax returns and/or a copy of your bank statements.
Loan funding. In a best-case scenario, your loan funds will be available shortly after the loan is put on the personal loan listing platform. However, all listed loans can remain on the platform for up to two weeks, which is known as the two-week listing period. You can track investor interest in your loan during the process.
But it is possible that your loan will not be fully funded within the two-week listing period. If it isn’t, you can either accept a lower loan amount (up to the amount funded), or you may need to reapply.
Interest rates and fees. Just like Lending club loans, interest rates with Peerfrom range between 7.12% APR and 29.99% APR. Rates are based on your Peerform Grade, and broken down into four alphabetic groups, each with its own rate range:
- AAA, AA+, AA, A+, and A: 7.12% APR to 13.94% APR (credit score range: 700+)
- BBB, BB+, BB, B+, and B: 14.86% APR to 19.44% APR (credit score range: 680 – 699)
- CCC, CC+, CC, C+, and C: 20.87% APR to 26.92% APR (credit score range: 600 – 679)
- DDD and DD+: 28.33% APR and 29..99% APR (credit score range: not indicated)
There are no application fees. There are however origination fees, typically 5.00% of the loan amount on all loan grades, except Peerform Grade loans AAA (1.00%), AA+ (2.00%), and AA (3.00%). The origination fee is deducted from your loan proceeds. For example, if your loan is $10,000, and the origination fee is 5.00%, you will receive net loan proceeds of $9,500. The origination fee is payable only if the loan is issued.
The preferred loan repayment method by Peerform is by direct debits from your bank account. But you do have an option to pay by paper check. If you do, there is a $15 check processing fee for each check.
Late payments are assessed a fee of 5% of the monthly payment, subject to a $15 minimum per occurrence. There is also an unsuccessful payment fee in the event that your payment is refused. That fee is $15 per unsuccessful attempt or a lesser amount as determined by state law.
There are no prepayment penalties in the event that you want to make a partial or full early payment on your loan.
Loan payments. You can repay your loan either by automatic draft from your bank account or by mailing in monthly checks. However, Peerform does charge a fee of $15 per payment if you pay by check. There is no charge if you pay by automatic bank draft.
Site security. Peerform follows bank-level security protocols, which include encrypting and storing sensitive data in dedicated 24-hour maintenance servers, which are protected with firewalls and housed in a secure facility. Servers are equipped with Secure Socket Layer (SSL) certificate technology to ensure encryption.
You also don’t need to concern yourself with the fact that investors will have access to your personal information. They will get only the information needed for investment purposes, but will not have access to any information that personally identifies you. In that way, you can apply for a loan anonymously, and not concern yourself that the information is available to someone who is either unintended or inconvenient, and certainly not for general public consumption.
Peerform Loan Program Overview
|Loan Purpose||Personal Loans for Various Needs|
|Loan Amounts||$1,000 to $25,000|
|Loan Terms||36-Month Fixed-Rate Installment Loans|
|Borrower Qualifications||Minimum 600 Credit Score, No Recent Negative Events, Maximum 40% Debt-to-Income Ratio, and Open Bank Account|
|Application Process||Quick 5-Step Process, Instant Qualification, and Rate Quote|
|Loan Funding||Loans Listed for Up to Two Weeks|
|Interest Rates and Fees||APR Ranges from 7.12% to 29.99%, With Origination Fees (5%, except for AAA, AA+, and AA Grades)|
|Payments||Prefer Direct Debit, $15 Check Processing Fee, Late Payment and Unsuccessful Payment Fees|
|Prepayment||No Penalties for Early Payments|
|Site Security||Bank-Level Security, Encryption, and Limited Investor Access for Anonymous Applications|
Investing Through Peerform
If Peerform is a great place to get a loan, it’s also a rich source of investment opportunities.
Here is how investing through Peerform works:
Investor qualifications. In order to invest in Peerform, you must be an accredited investor. That’s an investor who is either high income or high net worth, or both, and who is generally recognized as a sophisticated investor who understands risk, knows how to invest into it, and is prepared to lose all of his or her investment (the temperament factor).
According to the US Securities and Exchange Commission, an accredited investor is defined as anyone who…
- Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
- Has a net worth of over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
This differs from other P2P lenders. Prosper loan investors are allowed to start with as little as $25 to get started.
Investments offered. Peerform offers two types of investment products, whole loans and fractional loans. Whole loans are just what the name implies – you’re buying an entire loan. These investments are typically offered to institutions. Fractional loans are portions of loans, that are offered to individual investors.
These are not unlike investments on other P2P sites in which you can either invest in an entire loan or in small pieces of many loans, commonly called notes.
All loans available for investment on Peerform are subject to analysis by the Peerform Loan Analyzer. The tool uses a highly advanced and dynamic algorithm for pricing loans. It uses empirical methods rather than filters (which are used on most P2P platforms) in order to better calculate consumer credit risk.
Custom portfolio. The portfolio enables you to diversify by customizing your investments to meet your needs. You can set investment goals, and the customization tool will outline how to invest your capital in order to reach your investment goals in the most concise way.
Fraud protection. Loan fraud is not uncommon and increases loan defaults, so Peerform takes extra steps to weed it out. In addition to requiring documentation to verify the borrower’s identity and income on the loan registration form, Peerform also uses both proprietary methods and commercially available licensed technologies and solutions to detect and prevent fraud.
This includes third-party services such as Lexis Nexis for user identification, TransUnion for credit checks, and OFAC compliance.
Peerform also verifies that there is a variation of no more than 10% in the income stated by the borrower on the registration form and that which is proven by the income documentation. If needed, IRS Form 4506T will be completed and sent to the IRS to verify the borrower’s income tax records.
A small debit is taken from the borrower’s bank accounts and verified by the borrower to make sure that the bank account is valid. The borrower’s phone number and email IP location are also verified.
Investment returns. Peerform offers rates of between 6.44% and 28.33% (net of origination fees). This rate range refers to returns before deducting for loan defaults, so your actual returns will be something less.
Summary: Peerform Borrower & Investor Review
Peerform is one of a growing number of P2P lending sites that also offer investment opportunities. The platform uses cutting-edge technology to set the most accurate loan rates, which will also reduce the number of defaults that lower the investment return on many P2P lending sites.
How We Review Lenders:
Good Financial Cents evaluates U.S. lenders with a focus on loan offerings, customer service, and overall trustworthiness. We strive to provide a balanced and detailed perspective for potential borrowers. We prioritize editorial transparency in all our reviews.
By obtaining data directly from lenders and carefully reviewing loan terms and conditions, we ensure a comprehensive assessment. Our research, combined with real-world feedback, shapes our evaluation process. Lenders are then rated on various factors, culminating in a star rating from one to five.
Product Name: Peerform
Product Description: Peerform is a prominent peer-to-peer lending platform, bridging the gap between borrowers seeking personal loans and investors looking for potential returns. The platform operates on a marketplace model, emphasizing transparency and user-friendly experiences.
Summary of Peerform
As an established player in the P2P lending arena, Peerform offers an alternative avenue for individuals to secure personal loans without the rigidity of traditional banking institutions. Their marketplace model not only ensures competitive interest rates for borrowers but also presents investors with a platform to diversify their investment portfolios and seek potential returns. By leveraging innovative technology and thorough risk assessment, Peerform aims to maintain a balance of trust and efficiency for both borrowing and investing parties.
Cost and Fees
- Competitive Rates: Offers attractive interest rates, often more competitive than conventional bank loans.
- Investment Diversification: Provides investors an opportunity to diversify their portfolios beyond traditional instruments.
- Transparent Operations: No hidden fees and clear terms for all users.
- Comprehensive Risk Assessment: Utilizes advanced algorithms and data analytics to evaluate borrower credibility.
- Default Risk: Investors face the risk of borrowers defaulting on their loans.
- Platform Fees: Some users may find certain charges, like origination fees, to be on the higher side.
- Not Insured: Investments aren’t FDIC insured, introducing a degree of risk.
- Limited Loan Options: Primarily focused on personal loans, lacking broader loan variety.