What should Borrowers Look for Before Taking P2P Loans? And Ways in which Bridging Loans can Help you.
September 24, 2021
You may remember a time when your friend required money for renovating his home. So, if you had lent him a loan of £100, you have given him a Peer to Peer loan. Peer to Peer lending, in simple words, is a method that works by facilitating people in obtaining a loan by those who can pay it to them. The whole process doesn’t involve banks’ lending the money to the clients at an expensive rate.
Bridging loans are similar to Peer to Peer lending. They assist the borrowers by providing them with the money for fulfilling their needs. That can consist of loans for paying various types of taxes or buying a property. They are paid after a monetary deposit is provided against them.
So, in this post, we will guide you about what should the borrower Look For before taking Peer to Peer Loans? And ways in which bridging loans can assist you.
What can a Borrower Look For before taking a Peer to Peer loan?
Look for Comparisons
You can carry out an online analysis to determine the specific rates of various platforms by viewing what the platform is offering. Moreover, you can work with web analysis tools that can compare multiple types of portals. They will provide an overview of the rates and fees of every platform at one location. They can even assist you with their calculations and advice.
Search for the Lenders with the Least Amount of Rates and Fees.
Screen the platforms providing the minimum amount of loan prices. For example, many P2P lending firms offer loans at meagre rates.
Find the Appropriate Platform
Every Peer to Peer lending portal focuses on a different category of borrowers. Some of these platforms want borrowers who are salaried employees working in private firms. While others look for students, and then there are those who like expert professionals and entrepreneurs.
You will be assigned a score based on your credit history on the platform to inform the lender how secure it is to lend you the loan. That will also determine the interest rates you will receive from the lenders on every platform. Some portals will provide you with a loan, although when you don’t have a good score.
How Bridging Loans Can Assist You?
Bridging loans can help you in a variety of ways. They are mentioned here:
Make Payments for Necessary Tax Liabilities.
If you are experiencing setbacks when paying the necessary amount of tax that is applied to your business earnings, you can apply for the bridging loan. Commonly, you will first need to find out how much money you have in your account and how much additional amount you need.
1. Income Tax.
For the typical employee, income tax charges automatically get deducted from the salary, most of the time. However, if you are self-employed, you must pay this tax straight to HMRC. Therefore, it is usually advisable to utilize accountancy services to calculate this tax. So, you know the exact amount you want to receive from the bridging loan when you are short on resources while you have to pay this tax. Then you can apply for it conveniently. This is how a bridging loan can help you with your income tax payment.
2. Value Added Tax or VAT.
If your business is earning returns that exceed £84,000, you are legally liable for the VAT. Therefore, you must register your business with the government to pay this tax on your products and services. This money should be sent to HMRC. VAT is applied in these scenarios:
- If you are generating sales proceeds from business, like when you sell products and services.
- When hiring or providing goods for the loan.
- When you carry out business asset sales.
Therefore, after you determine how much VAT applies to your business, you may discover a shortfall in the amount of money you have to pay for the tax. You can obtain this amount by applying for a bridging loan. So, this is where the bridging loan can help you in paying for the tax within time.
The Crux of Post
You can ask various types of questions before you lend a loan from Peer to Peer lending. That can include:
- Performing searches for the portals that provide the best deals.
- Finding out the minimum interest rate platforms.
- Reaching out to the platform that’s relevant to the user.
Moreover, with bridging loans, you can make payments for various types of taxes if you are short on resources. These taxes can consist of income tax and value-added tax or VAT.