Debt consolidation popular purpose for peer-to-peer borrowing

01/29/2010

Peer-to-peer lending is becoming a more popular form of borrowing, and recent statistics show debt consolidation is one of the main focuses of consumers that do so.

According to peer-to-peer lender Prosper Marketplace, 53 percent of all loans facilitated by the company during the second half of 2009 were for the purposes of debt consolidation.

By far, debt consolidation had the highest number of requests, as the second-most popular reason for seeking a loan was for "other use" at 18 percent. Business loans came in third at 12 percent, while home improvement was fourth with 9 percent. Education and auto purchases came in a 4 percent each.

Though some consumers may feel at ease with peer-to-peer lending, others may feel a bit more comfortable by going through a consumer credit counseling service when seeking debt consolidation.

One of the advantages of debt consolidation is that it has the potential of lower the interest rate on the amount a person owes in things like credit card debt.

Along with debt consolidation, a counseling service can provide guidance in the form of budgeting advice while also analyzing a person's financial situation

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