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Peer-to-peer lending isn't a new concept, but in the past decade, it's really taken off online. Peer-to-peer聽lending connects people with a little extra cash聽with those in need, a process which is聽infinitely better -- both for the consumer and the economy -- than other options, like taking out a payday loan.

One of the major P2P lending agencies in the United States is聽Prosper. Prosper offers loans up to聽$35,000 and charges a five聽percent closing fee. All the money loaned through Prosper comes out of the pockets of regular people all over the country. These loans are unsecured, meaning your qualification for them is based on your credit history, but you don't need perfect credit to get one.

What can you use a P2P loan for?

You can use a peer-to-peer loan from聽Prosper聽for just about anything, but there are a few reasons that make the most sense from a financial perspective.聽An obvious one is聽debt consolidation. A loan from聽Prosper聽is likely to be at a lower annual interest rate than a credit card bill. This will help you pay back your bills faster, and will mean your payments actually go towards paying off the principal, not just more interest.

Another common reason to take out a P2P loan is for聽home improvement. Typically, home improvement loans are funded through home equity loans from banks or credit cards. Home聽equity loans can take a long time to get approved and usually come with some hefty fees, which is why many finance-savvy home renovators are turning to companies like聽Prosper聽instead.

Business loans聽are聽a great way to expand a business through added capital, and are also made easier through P2P lending. While the traditional聽method requires getting tenuous approval from a bank, when you use聽Prosper, the only thing you'll need is a decent credit score.

Need to get around?聽Prosper聽can also be used for聽auto loans, which can save you the money you'd spend on financing and get you a much sweeter deal on your new whip!

Finally, you can use P2P lending聽elective surgeries,聽short term loans, and much more, as聽there's no penalty for paying it back early.

Now that you know聽how聽to use Prosper, here are my top four聽reasons聽why聽you should:

1. Prosper offers lower聽interest rates.

Payday loans typically charge obscene聽amounts of interest, which can sometimes be as high as 574 percent in some states. P2P lending sites like聽Prosper聽typically charge between 5.9聽percent (for very good credit) and 30 percent APR聽(for fair credit), which can be much less than what your credit card company is charging you. Which would you rather pay? Nearly 600 percent interest, or 30? I think I can guess your answer to that.

2.聽You don't need stellar credit.

P2P lenders vet potential customers聽well, and while you probably won't be able to get a substantial loan with terrible or no credit, you don't need to have the 700+ rating required by most banks:聽Prosper聽offers loans to people with "fair" credit scores starting at 640.

3. You can borrow a lot of money.

Prosper聽allows you to borrow up to $35,000, which聽could mean a down payment on a house, a brand new car, or even the ability to pay off a high-interest student loan.

4. There's no聽penalty for paying it back early.

Banks often charge a prepayment fee on their loans in an attempt to keep you locked in to your monthly payments for longer. If you come into enough money to pay off the loan early, you'll be charged a fee -- often hundreds of dollars -- to make up for the money they're losing in interest. But P2P lending agencies likeProsper聽won't聽charge you a cent extra to pay off your loan early. Sure, the lender won't make as much money in the long run, but it's an ethically sound policy that's a huge benefit for borrowers.

This article first appeared in Brad's Deals.