By Penny Yi Wang for Medill News Service
In the past few years, consumers disillusioned with tight-fisted banks have jumped on the peer-to-peer lending bandwagon.
When the Great Recession hit, banks suffered big losses as borrowers defaulted on loans they had taken out during the economy’s long upturn. In response, lenders have drastically tightened their lending requirements. As a result, many borrowers with anything less than stellar credit now can’t qualify for traditional bank loans.
But non-wealthy Americans still need loans from time to time. And as bankers have turned stingy, borrowers have increasingly turned to alternative online lending platforms, such as Lending Club and Prosper Marketplace.