P2P Lending On Reddit

P2P Lending On Reddit

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated October 5, 2021

Unexpected expenses like a car repair or medical emergency can sometimes have you scrambling for cash. While some are able to fall back on their savings, others rely on their credit products. However, not everyone has savings or easy access to credit products like credit cards due to bad credit and poor finances. 

Fortunately, technology has evolved and created new lending platforms and services that provide individuals with subpar credit the opportunity to access credit quickly. From online lenders to peer-to-peer lending, there’s no shortage of options for those with bad credit or for those looking for an alternative to the big banks. Even Reddit has a subreddit where individuals can borrow money. 

What is r/borrow Reddit?

r/borrow is a subreddit on Reddit created in 2014. It was created to help members of the Reddit community (aka: Redditors) gain access to short-term funds. While the subreddit itself does not provide loans, it acts as a platform that individuals can use to borrow money from other individuals. It basically helps facilitate the borrowing and lending process. In particular, the subreddit helps regulate the semantics of it all.

This subreddit was created for individuals in need of cash immediately but struggled to access it due to bad credit and overall poor financial health. 

p2p - reddit
Source: subreddit: r/borrow

How Much Can You Borrow? 

r/borrow is meant to provide individuals with quick small funds up to $1,000. They recommend that those looking for loans more than $1,000, go to their bank or credit union. It should also be noted that first-time borrowers aren’t likely to get more than $200 dollars. Your ability to receive larger loans will increase as you build your reputation as a legitimate borrower on the subreddit. 

Who Can Use it? 

While anyone in the world can use the subreddit, you must become a member of the group before you can make a request. Becoming a member is easy, you simply have to sign up using your email. However, in order to make a request, you do need to meet certain requirements: 

  1. You must be a member for 90 days before making a loan request. 
  2. You must have 1000+ karma points before making a loan request.

Note: Karma points are based on your involvement in the Reddit community. This can be achieved by getting upvotes on your posts and comments. 

What is this Subreddit Good For? 

As mentioned, this subreddit is catered to those who have a hard time accessing credit due to their bad credit and overall financial circumstances. It is particularly useful in situations where you need a small sum of money immediately. Whether you need $20 or $1,000 dollars, you can get funded in as little as a few hours. 

Moreover, you can determine the amount of interest you want to pay back and by which date. In general, the loans are paid back within a couple of days to a couple of weeks. However, the request must be reasonable or else you risk being denied. Here are some real requests seen on the subreddit:

  • A person requested a loan of 150 on October 28, 2020, which he expects to pay back by October 30, 2020. He added $25 for interest. 
  • A person requested a loan of 175 on October 27, 2020, which he expects to pay back by November 06, 2020. He added $25 for interest.
  • A person requested a loan of $90 on October 27, 2020, which he expects to pay back by November 07, 2020. He added $10 for interest.

Recommended Interest Rates

While you can choose how much interest you want to pay, it is recommended that you offer no more than 30% interest on loans paid within 30 days. For loans with a payment term of more than 30 days, you should use a rate of 1% per day. 

How Will You Receive the Loan?

In general, users have used Paypal, Venmo, Zelle, Interact e-Transfers, and Cash App to receive their funds. However, other money transfer services may be accepted, but you’ll have to discuss it with your lender. 

How Does it Work? 

Borrowing using Reddit’s subreddit: r/borrow, can be broken down into 4 steps. 

1 . Requirements: In order to borrow money on this subreddit, you must first meet the requirements. This includes having a Reddit account that is at least 90 days old and having 1000 karma points. 

2. Making a Loan Request:  If you meet the criteria, you can proceed with making a request. In order to make a request, borrowers must submit their loan request by creating a post using the following format: 

[REQ] (Amount ) – (#City, State, Country), (Repayment Date), (Payment Method/Pre-Arranged)

Here is a real-life example of someone making a request on r/borrow:

p2p - reddit

3. The Lender: Once you make a request, lenders will view your request and then approach you. Here you’ll have the opportunity to fine-tune the details of your loan request. Your lender will also ask you to provide certain information to help verify your identity and contact information. In general, lenders may ask for your driver’s license or social media. When providing such information, it is important not to divulge too much information. For example, when providing your driver’s license, you should only show the front of your ID while covering your ID number and part of your address.   

Check out what bad credit lenders look for when approving an applicant.

4. Record Your Transaction: Once you and your lender have made an agreement, the lender will send you the money. Be sure to record each step of your process in your original post. This allows the bots to record your transaction and ensure nothing is deleted. Here is an example of a user confirming a lender has lent him $100 on r/borrow. 

p2p - reddit

By recording each step of the process, future lenders and borrowers will be able to see the transaction history of either party if they ever work with them. 

Pros and Cons of Using r/borrowing

If you’re a regular Redditor, you may already meet the requirements to make a loan request. Newcomers may not receive the funds they need unless it is a really small amount. 
Loans are usually funded hours after you make a request.The requirements to make a loan request can take a long time due to the 90 day waiting period and the 1000 karma point.
Redditors that have previously used the subreddit have a higher chance of having their loan request fulfilled. If you’re not tech-savvy, it can be complicated to understand the process, rules, and regulations. 
The borrowing process is regulated by the subreddit. All unpaid and paid loans are documented. You need to be cautious of scammers as there is a whole list of users who have been blacklisted due to scams.
This is an informal borrowing platform, as such, there are no credit checks and payments aren’t reported to the credit bureau. 

Is r/borrow Safe?

r/borrow is a subreddit where anyone can lend or borrow money. It is simply a platform that individuals can use to borrow money from other individuals. There are no legalities involved. To elaborate, there is no legally binding contract or any paperwork you must sign, there are also no consequences for late or non-payments such as penalty fees or a lowered credit score. The only consequence for non-payments is getting your account banned.  

Moreover, r/borrow has placed a number of rules and regulations within the group to help borrowers validate the legitimacy of their lender. You can validate your lender by checking their lending history through r/borrow. Before engaging with a lender, it may be wise to also use the Universal Scammer List Search to validate the legitimacy of the lender. Simply enter the lender’s username to see if they are banned. 

List of Items You Should Never Share

While the r/borrowing subreddit is convenient, it also attracts the attention of scammers. In order to protect users from being scammed, r/borrow created a list of items you should never share. If your lender asks for any of the following information, report them and cease contact immediately. 

  • Any Login Information – Username, passwords, and any information that can help them log into your bank account, email account, Reddit account or any other account). 
  • Your SIN – The people who fund you are not real lenders, they are regular individuals like yourself. As such, they do not require your SIN in order to fund you) 
  • Your Entire Driver’s License – r/borrow recommends that you only provide the front of your driver’s licence, but cover the ID number and part of your address. Only provide the city & province
  • Compromising Pictures of Yourself – Some scammers have been asking for compromising pictures of yourself for collateral, but this is a scam and potentially illegal.
  • Upfront Payments – A common scam lenders use, is asking you for some upfront payment before they lend you any money. 

Bottom Line

Gaining access to credit when your finances are askew can be difficult. However, with innovative platforms like these, covering unexpected costs is no longer impossible. For those who want a loan without any checks on their credit score, income level, debt level, or employment, r/borrow is a contemporary way of getting cash quickly. 

Rating of 5/5 based on 5 votes.

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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