While peer-to-peer lending sites that match needy customers with money sources are mostly known for credit-card debt consolidation and small-business loans, at least one online-loan marketplace, San Francisco-based Prosper has linked up with HomeAdvisor and is actively encouraging loans for home improvements, The Wall Street Journal reports.
These firms' loans don’t have to be secured against a home or other collateral, and the peer-lending websites have less stringent credit-qualification requirements than banks and other traditional lenders, the newspaper reported. That could prove useful for people who need home improvement projects done but can't access their home equity line. The newspaper also added this caution:
However, peer-lending websites often charge higher interest rates than borrowers would typically get with a mortgage or home-equity loan. There may also be other fees and restrictions, depending on the servicer and the terms.