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Generally speaking, it's probably a bad idea to borrow money from a stranger on the internet. While it rarely might be possible to safely get financial help or a loan, a stranger's offer to lend you money could also be the first step of a more complex scam. It might be just as easy—and much safer—to get a loan from a legitimate lender instead.
Should You Borrow Money from Strangers?
If you quickly need money for an emergency, turning to strangers online might seem like a viable option. In some situations, it could work out well. For example, if you're part of a private group on social media, such as a local mutual aid group, religious group or parents network, you might find that others are open to helping you out. However, the money is often gifted rather than loaned.
When you're asking for a loan, you might be taking on two big risks. The first is that the other person agrees to lend you money but offers predatory terms and you have trouble repaying the loan. The other person might threaten, dox or harass you online, or even come after you in person.
The second big risk is that the person offering you a loan is actually a scammer. There are all sorts of potential scams which could put your identity and finances in danger. For example, the person might ask for your personal information before sending you the money, but then they use it to steal your identity.
Overpayment scams are also very common. The person might send you more money than you requested and ask you to send the excess amount back. You send back the extra money and then find their initial transfer gets reversed a few days later—they might have used a stolen credit card or claimed it was a fraudulent transaction. Now, you don't have the money they sent you and, depending on how you sent back the overpayment, you might not be able to get your money back.
What About Peer-to-Peer Lending and Lending Circles?
You might be able to legitimately and safely borrow money from someone online if you use a lending platform or a nonprofit that organizes lending circles as an intermediary.
Peer-to-Peer Lending Is Often Like Getting a Personal Loan
A peer-to-peer (P2P) lending platform connects borrowers and investors to help facilitate lending. The platform controls the application, underwriting and repayment process, and fronts the loan amount. It then sells the loans to investors, or sells investors a stake in the loan's proceeds.
In general, you won't be able to explain why you need the money and you won't know who (or how many) people helped fund your loan. You may find it's similar to getting a personal loan from a bank or online lender, and your credit score can affect your loan eligibility and offers.
Lending Circles
Nonprofit-managed lending circles are generally offered to help people build their credit and savings, but they can also be a way to safely borrow money from others.
When you join a lending circle group, you might meet everyone in person or through a video call and share a little bit about yourself and your goals. Each month, everyone contributes the same amount of money, and one person gets the entire pot. The company managing the lending circle collects and distributes the funds and might cover the difference if someone can't afford their contribution.
There are often no interest charges or funding fees, which means you can get a cheaper loan through a lending circle. However, it might not be a good option if you need money immediately. It can take a few weeks to form a new lending circle, and a random drawing could determine the order of who receives the money each month. Group members can explain why they want to go earlier or request a specific month and ask others to trade spots, but there's no guarantee you'll be able to avoid waiting months for your turn.
Lending circles also aren't available everywhere, but you can use Mission Asset Fund's directory to search for options based on your ZIP code.
Other Options for Borrowing Money Online
When you need to borrow money and don't think a stranger on the internet is the way to go, here are some other options to pursue:
- Personal loans: Online lenders offer personal loans, a type of unsecured installment loan, and can often get you the funds within a few business days of approval. However, similar to P2P platforms, your credit score, income and outstanding debts can greatly affect your ability to qualify for a loan, how much you receive and your offer's interest rate.
- Lines of credit: A line of credit gives you access to a loan without requiring you to borrow (and pay interest on) the money right away. After you get approved, you'll have an account with a credit limit, which sets a cap on how much you can borrow at once. Then, when you need to borrow money, you can take a loan (or "draw") against your line of credit, and you'll only pay interest on that amount. As with loans, your credit score can affect the offers and terms available to you.
- Buy now, pay later: If you need to borrow money for a specific purchase, a buy now, pay later (BNPL) plan could be a good option. With pay-in-four plans, you pay a quarter of the cost today and another quarter every two weeks until you've repaid the full amount. Your credit score generally doesn't affect your eligibility, and there's no interest or fees for the financing, provided you make all the payments on time.
- Credit cards: You could also try to open a new credit card. If the card has an intro 0% APR offer, you could use it to finance purchases or transfer other debts and then pay down your balance during the promotional period without accruing interest. Some credit cards give you instant access to the card number or let you add the card to a digital wallet, allowing you to use the account before you receive the physical card.
The best option can depend on why you need to borrow money and your credit. If you're looking to make a modest purchase and don't have good credit, a BNPL might work well. But if you're trying to consolidate higher-rate loans, a personal loan or balance transfer card might be better fits.
If you need money for an emergency, you could also look into assistance programs that can help with bills and necessities. A call to the free 211 hotline could be a good place to start.
Check Your Credit Score and Offers
Your credit history and score will often impact your options when you're trying to borrow money online. You can get your Experian credit report and a FICO® Score☉ for free—and get free monitoring and tracking to keep an eye on your credit. Once you create an account, you can also use Experian's free comparison tools to get matched with personal loan and credit card offers based on your unique credit profile.