Last year, online investing platforms – often called robo-advisors – set up shop in Canada to try and revolutionize the way we invest. Now, online marketplace lending has arrived with hopes to change the way we bank and borrow money.

Marketplace lending, which has been growing in popularity in the United States for nearly a decade, brings together qualified borrowers and funds from private investors in a secure online format.

Free from the brick-and-mortar framework and outdated technology that plagues our traditional banks and credit unions, marketplace lenders can offer lower interest rates than you’d find from a bank issued credit card or personal loan. Furthermore, this on-demand banking process can fund your loan request in as little as 24 hours.

Compare that with a traditional bank, where an online application has to be reviewed by an actual person and, more often than not, the borrower still needs to visit a branch to sign and complete the process.

Enter Grouplend – Canada’s first marketplace lender – which says the majority of its borrowers are using the service to pay down credit card debt. Borrowers can request loans between $1,000 and $30,000 at rates ranging from 6.3% to 17.5%. Loan terms are for three years, but customers can repay ahead of time with no penalty.

“We will never cost more than a credit card, and sometimes at the 17.5% rate we’re helping people pay off predatory, payday loan products,” said Sean O’Connor, director of business development at Grouplend.

Its lending criteria means that borrowers must be at least 19 years of age and have a minimum 12 months credit history, employment income of at least $30,000 annually, plus a minimum credit score of 690.

One of the main advantages of using Grouplend is that an application will not affect your credit score. That’s because it does what’s called a soft inquiry to review select information from your credit report. This information, along with the rest of your application, allows Grouplend’s credit algorithm to generate a personalized quote.

“The worst thing that can happen when you apply for a loan with Grouplend is you’ll lose the 120 seconds of your life that it takes to fill out the application,” said O’Connor.

Banks and credit card issuers continue to increase rates on unsecured loans and credit cards. Marketplace lending is an attractive alternative to help pay off high interest debt and access credit at often more reasonable terms than through traditional lenders.

Get an instant personalized quote from Grouplend here.

This week’s recap:

Last week we gave you the chance to win a copy of Ron Lieber’s new book, The Opposite of Spoiled, by sharing your thoughts about allowance and the tooth fairy. The winner of the book, chosen at random, was Jimmy, who left a comment on April 26th at 8:10am. Congrats!

On Monday I asked whether your child’s allowance should be tied to chores.

On Wednesday Marie explained how to improve your home with good landscaping.

And on Friday Marie gave the low-down on unclaimed bank account balances.

Scotiabank offers two of the richest rewards credit cards on the market and right now, for a limited time, when you apply for the Scotia Momentum Visa Infinite card or the Scotiabank Gold American Express card, you’ll get a free $100 gift card. Read more about this promotion here.

Weekend Reading:

Michael James is bothered by nonsense arguments both for and against increasing TFSA contribution limits.

Rob Carrick says all this talk of rising TFSA limits is distracting Canadians from our serious debt issue.

One of the reasons we’re up to our eyeballs in debt is because we can’t stop trying to keep up with the Joneses.

A New York Times article says the workplace demographic is changing (again). This time, make room for Generation Z.

A funny piece on Medium argues that our economy doesn’t make stuff anymore. So what does it make?

And this tech writer explains why smart tv’s aren’t all that they’re cracked up to be.

Kerry Taylor went house hunting in a Toronto neighbourhood and reveals what $1-million buys there today.

A blogger explains why she feels like she dodged a bullet by not buying a house in Toronto.

Recently married Justin Bouchard shares 10 financial tips for newlyweds.

This fascinating video about a guy who tries to learn how to ride a reverse bicycle (turn the handlebar left and the wheel goes right, and vice-versa) shows just how hard it is to reprogram the brain:

The Globe and Mail’s portfolio strategy lab looks at a case study on how seniors can put a higher contribution limit for tax-free savings accounts to work.

Jonathan Chevreau analyzes the million-dollar tax problem – how to minimize RRSP withdrawal pain.

More early retirement extreme? This Vox article looks at the early retirement movement and what it means to rethink your core values about money and life.

Only in hindsight do things look so obvious, according to Morgan Housel, who argues that the future is as uncertain as the past is obvious.

Dan Wesley answers a reader’s question: Can I save with a teaser rate mortgage?

Have a great weekend, everyone!


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