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Consumers using peer-to-peer lending sites instead payday loans

“It [peer to peer lending] opens the doors whereas others might be closed,” said Greg McBride, senior financial analyst at Bankrate. “It’s a low-cost alternative, even for someone with a blemished credit history. Peer-to-peer has a lower cost than resorting to a payday loan.”

• VirginMoney formalizes the lending agreement between two people, friends or family members, by providing loan documents and setting up payment schedules and ways to handle defaults when borrowers stop paying back loans.
• Mortgage broker Ernest Nichols III refers request for loans to Prosper to keep the loan relationship more professional.  He has personally helped finance about 60 loans sought by various borrowers on Prosper.com.

Source: Contra Costa Times – Peers set up loans through Web sites