Frequently Asked Questions (Borrower)
Answers
How do I borrow money?
First, you must register as a People Capital member. In order to become a
registered borrower, you will need to successfully complete the identity
verification, fraud solutions and our credit scoring system. After you have
become a registered borrower, you can create a loan request to post on the
website. Once you have posted your loan request, lenders are able to review your
profile and bid on your loan. If your loan receives 100% funding from lender
bids — at the time of listing expiration — it will automatically be
after internal review.
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Who can borrow?
To borrow money through People Capital you must:
- Be enrolled at least half time and pursuing a degree at a
US educational institution.
- Be both a citizen and a resident of the United States.
- Have a valid Social Security number.
- Be at least eighteen and the in your state of residence (which must be a state in which people Capital is
).
Please note that People Capital has no borrower minimums for or
.
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What is a co-borrower?
A co-borrower is a co-signer who is individually and jointly liable for your loan. Since they are legally obligated in the loan repayments, co-borrowers are normally
trusted friends or family members of the borrower. In order to be a co-borrower for your loan, an individual must be at least the
in the state of his/her residence,
a citizen and resident of the United States, have a valid Social Security number and have a of C+ or better.
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Who are the lenders?
Please note: At the current time all lenders on the People Capital platform must be accredited investors or entities. Which means that they must meet the following requirements:
- A bank, insurance company, registered investment company, business development company, or small business investment company
- An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million
- A charitable organization, corporation, or partnership with assets exceeding $5 million
- A director, executive officer, or general partner of the company selling the securities
- A business in which all the equity owners are accredited investors
- A natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase
- An individual with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
- A trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes
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Who services the loans?
People Capital retains all rights and responsibilities associated with the servicing and collection of all loans on the website.
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How does People Capital make money?
People Capital charges borrowers an application fee, as well as an origination fee at the time the loan is . We charge lenders a servicing fee for the servicing and collection of the loans.
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What are bids?
A bid is a commitment made by a lender to purchase all or part of your loan from People Capital when it is .
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How much money can I borrow?
You can borrow up to the total of either the limit set by your state of residency or the total of your accredited educational costs approved by the school. In addition, at this time, People Capital sets a maximum loan amount of $25,000.
Your state of residency and/or type of loan selected will determine the minimum amount you can borrow.
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What types of loans are available?
All loans are unsecured and are available for terms of between 2 years and 15 years.
People Capital offers three types of loans with variable repayment options and maturities. They are:
Interest Only with Balloon
The borrower that chooses this loan type will only pay the greater of the interest due on the loan or a $50 minimum on a monthly basis while they are enrolled in school and for eleven months after their anticipated graduation date. On the twelfth month after the anticipated graduation date, the remainder of the loan is due in full. This last payment is what is known as a balloon payment. The available durations of Interest Only with Balloon loans (2 to 5 years) are based on the student's current year of enrollment. Students requesting this type of loan must apply for a minimum of $1,000.
- 2-year Interest Only with Balloon
- 3-year Interest Only with Balloon
- 4-year Interest Only with Balloon
- 5-year Interest Only with Balloon
Example: A person in their freshman year expecting to graduate in four years would qualify for a 5-Year Interest Only with Balloon loan. They would only pay the monthly interest during the four years they are enrolled in school and eleven months after graduation. On the twelfth month, the remaining balance of their loan is due. Likewise, a person in their senior year would only qualify for a 2-Year Interest Only with Balloon loan.
Standard Private Loan
The borrower that chooses this loan type will only pay the greater of the interest due on the loan or a $50 minimum on a monthly basis while they are enrolled in school and for eleven months after their anticipated graduation date. On the twelfth month after the anticipated graduation date, the remainder of the loan is paid in monthly installments consisting of interest and principal until the loan is repaid. This last series of monthly payments is what is known as amortized payments. The available durations for Standard Private Loans are ten or fifteen years. The Interest Only periods are based on the student's current year of enrollment. Students requesting this type of loan must apply for a minimum of $3,000.
- 10-Year Standard Private Loan with 2-Year Interest Only Period
- 10-Year Standard Private Loan with 3-Year Interest Only Period
- 10-Year Standard Private Loan with 4-Year Interest Only Period
- 10-Year Standard Private Loan with 5-Year Interest Only Period
- 15-Year Standard Private Loan with 2-Year Interest Only Period
- 15-Year Standard Private Loan with 3-Year Interest Only Period
- 15-Year Standard Private Loan with 4-Year Interest Only Period
- 15-Year Standard Private Loan with 5-Year Interest Only Period
Example: A person in their freshman year expecting to graduate in four years would qualify for a 10- or 15-Year Standard Private Loan with 5-Year Interest Only Period. They would only pay the monthly interest during the four years they are enrolled in school and eleven months after graduation. On the twelfth month, the remaining balance of their loan is paid monthly but includes interest and principal. Likewise, a person in their senior year would only qualify for a 10- or 15-Year Standard Private Loan with 2-Year Interest Only Period.
Straight Amortized Loan
The borrower that chooses this loan type makes monthly principal and interest payments immediately until the loan is repaid. There is no "Interest Only" period. The only duration available is 3 years. Students requesting this type of loan must apply for a minimum of loan amount of $1,000.
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Can I have more than one loan at the same time?
A borrower may have only one loan request, and cannot have another loan request while any other loan is in .
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What types of borrower fees are associated with my loan?
People Capital charges an application fee (payable by credit card) and an origination fee
(which is deducted before your loan check is disbursed). You may also be subject to failed payment fees and/or late payment fees.
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How does your identity verification and fraud solutions work?
People Capital submits your personal data to our partner databases and requires each member to verify their identity by answering a series of questions. Information is also submitted to check for known criminals, terrorists, money launderers or other flagged individuals.
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Where do you get my credit report?
People Capital has partnered with and gets your credit summary data and scoring
from Experian's products.
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Will my credit report be impacted when People Capital pulls my credit summary?
No. People Capital conducts what is commonly referred to as a "" inquiry to obtain data for your
loan request. While this data is the exact data from your credit report, the soft inquiry is not reported or recorded on your credit report and therefore does not
have any impact. However, once your loan is approved and , People Capital will conduct a ""
inquiry and this hard inquiry will be reported and recorded on your credit report and appear just like any other lender inquiry.
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What if I don't agree with the credit data from Experian?
If you believe your credit report contains errors, you can dispute the errors with Experian by contacting them at 1-888-397-3742 or by accessing their
website at www.experian.com. Additionally, according to
you are entitled to, and can request,
a free credit report, on an annual basis, by going to www.annualcreditreport.com.
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What if I don't have a credit report?
If you do not have a credit report — due to the lack of loan history data or otherwise — you will be assigned a credit grade of "NC."
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How do I know what rate to use when I set up my loan request?
You will be asked to provide the maximum rate you wish to pay on your loan during the loan request application process. Thus, while it is probable that lenders will bid your rate down, you should only use a maximum rate you would be willing to pay. (Please note that every state has a limit on the usurious rate that is allowable for a loan, this will also act as an upper limit to the maximum allowable rate on your loan.)
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How does the auction process work?
The bid must have a minimum value of $1,000, but can be as high as the total amount of the loan request. Along with the dollar value of the bid, the lenders must also specify the minimum interest rate they are willing to receive, if the loan is . (Please note: Lenders are bidding on loan request postings during the auction, but they are not bidding to purchase the loans directly. Instead, they will be purchasing Notes dependent for payment on payments that People Capital receives on the corresponding borrower loans.)
The "final" interest rate is the highest interest rate of all the winning bids.
First steps: initial loan rates
Borrowers are asked to indicate the maximum rate they are willing to pay on their loan during the loan request application process. This rate will be displayed on the website in the posting for each loan request. Lenders can either bid the maximum rate indicated by the borrower, or a lower rate that they would be willing to accept on each Note that they purchase. There will typically be multiple bidders on each loan request, and these bidders will compete with each other to fund the loan by offering competitive interest rates. However, bidders will not be made aware of the interest rates offered by other bidders during the auction; they will only see the current going rate on the loan.
During the auction: rate changes
As more lenders bid on a loan, those offering comparatively higher interest rates may be outbid, and will therefore not be sold a Note at the end of the bidding period. Placing a bid commits a lender to purchase a Note if they are a winning bidder, but there is no guarantee that a lender will be able to purchase a Note (simply because he or she has placed a bid on a loan). By allowing lender members to competitively bid on loan requests, borrower interest rates may be bid down from the maximum rate they indicated they were willing to pay in their loan request. There is no guarantee, however, that the rate will be bid down.
When bids have been placed at a given interest rate and equal (in aggregate) the full value of the loan amount requested, the next bidder must offer an interest rate at least 0.05% lower than the standing rate. Bids at the higher interest rate would then be knocked out (outbid) from the auction, to the extent that the value of the lower bids match the value of the higher bids. Relatively higher bids are knocked out of the auction in reverse chronological order (i.e., the latest bidders are knocked out first).
The loan auction: an example
For example, if a $20,000 loan is listed at 20.0% and 10 lender members have each bid $2,000 at 20.0% by the end of the bidding period, the loan will be for $20,000 at a 20.0% interest rate. However, if an 11th bidder came in before the auction end, that bid would require a 19.95% interest or a lower rate. If the auction ended and the 11th bidder had bid $2,000, the loan would still be at 20.0%; but the last bid at 20.0% would be knocked out of the auction (i.e., would no longer be a winning bid), unless another bid was made by the bidder at 19.95% or lower. In this circumstance, the 11th bidder would receive a higher interest rate (20.0% rather than 19.95%) than initially indicated in the bid.
Lenders may also be considered partially winning bidders at the end of a bidding period. For example, if the 11th bidder had bid $1,000 instead of $2,000, the last bidder who had bid $2,000 at 20.0% would become a partially winning bidder, because half of his or her original bid would be counted toward the final value of the borrower loan. This bidder would then purchase a Note from People Capital with a principal value of $1,000, rather than $2,000.
Rates and winning lenders
Lenders indicate the minimum interest rate they are willing to receive on their Notes when they make bids, so the rate they will receive if they become winning bidders on a loan may be above, but cannot be below, the rate they indicated in their bid. For example, if a $10,000 loan is listed at 10.0% and one lender member bids $5,000 at 10.0%, a second bids $3,000 at 9.0% and a third bids $2,000 at 8.0%, the loan would be at 10.0%.
In order for the interest rate on a borrower loan to be bid down from the rate initially indicated by the borrower, bids must be made on the loan request in an aggregate amount equal to at least 100 percent of the value of the request.
Other loan outcomes
If by the end of the bidding period a borrower loan does not receive bids totaling at least 100 percent of the amount requested, or if the borrower declines the loan, or if People Capital cancels the loan for any reason, the posting expires and no loan is funded to the borrower. Borrowers may post a new loan request on our platform.
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How long does an auction last?
Borrowers can select the period of time a loan auction should run. If the loan gets fully funded before the expiration date, however, the borrower can choose to end the auction early.
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Can I cancel an auction?
Yes. You can cancel an active auction at any point before it has completed. Additionally, at auction end, you can choose not to accept the winning bids.
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At what rate will my loan be set?
The "final" interest rate is the highest interest rate of all the winning bids.
Borrowers are asked to indicate the maximum rate they are willing to pay on their loan during the loan request application process. Lenders can either bid the maximum rate indicated by the borrower, or a lower rate that they would be willing to accept on each Note that they purchase. There will typically be multiple bidders on each loan request, and these bidders will compete with each other to fund the loan by offering competitive interest rates.
When bids have been placed at a given interest rate and equal (in aggregate) the full value of the loan amount requested, the next bidder must offer an interest rate at least 0.05% lower than the standing rate. Bids at the higher interest rate would then be knocked out (outbid) from the auction, to the extent that the value of the lower bids match the value of the higher bids. Relatively higher bids are knocked out of the auction in reverse chronological order (i.e., the latest bidders are knocked out first).
For example, if a $20,000 loan is listed at 20.0% and 10 lender members have each bid $2,000 at 20.0% by auction end, the loan will be for $20,000 at a 20.0% interest rate. However, if an 11th bidder came in before the end of the bidding period, that bidder would have to bid at 19.95% interest, or a lower rate. If the auction were to end at that point and the 11th bidder had bid $2,000, the loan would still be at 20.0%, but the last bidder who had bid at 20.0% would be knocked out of the auction (i.e., would no longer be a winning bidder) and would not be able to purchase a Note that corresponds to the loan, unless another bid was made by the bidder at 19.95% or lower. In this circumstance, the 11th bidder would receive a higher interest rate (20.0% rather than 19.95%) than he or she had initially indicated in the bid.
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Once my loan is originated, how do I pay it back?
Each month, People Capital will automatically debit the checking account number
you provided or process the check that you mail us.
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I selected to have my monthly student loan payments debited from my banking account. What will the transaction look like on my monthly banking statement?
Since you selected to have your payments debited from your bank account, you will notice a debit from University Accounting Services in accordance to the repayment schedule provided in your Final Approval Disclosure.
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Can I make more than the minimum monthly payment?
Yes. Currently, you must contact our Customer Service Department directly to do so.
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If I pay the entire loan off early, are there any penalty fees?
No. There are no prepayment fees if you choose to pay your loan off early. You are only required to pay accrued interest and other charges
that have been incurred up to the day on which you pay it off.
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What happens if my loan payment is late?
If your payment becomes more than 15 days late, you will be charged a late fee. If your loan continues to be delinquent you will also be charged a late fee after 45 days, 75 days, and 105 days. Once your loan goes past 120 days it will be considered in default and may be sold to a debt purchaser. If your loan payment becomes 60 days late, People Capital will report this event to all consumer credit reporting agencies. In addition, each time your automated bank account debit fails, which may be due to insufficient funds or a closed or frozen bank account, you will be charged a failed payment fee.
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If I have a co-borrower, at what time would People Capital debit his/her account?
We will not attempt to debit your co-borrower's account until we are unsuccessful in collecting money from your account three separate occasions. If we are unable to debit your account on the due date and two subsequent days (on the 9th and 19th late days), People Capital will then attempt to debit the amount, and all unpaid late and failed payment fees, from your co-borrower's bank account on the 26th late day. Once your account is brought "current," we will once again continue to debit your account at least three times before going back to your co-borrower's bank account in subsequent months.
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What happens if I default on paying back my loan?
After 4 months of delinquency, your loan will be considered in default and may be sold to a debt purchaser. Your
default will be reported to the consumer credit reporting agencies and will remain on your credit report for up to 7
years. Note that student loans may not be dischargeable in bankruptcy.
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