Venmo is a well-known P2P platform that lets users send and receive money conveniently.
Most users go beyond Venmo's payment services and wonder whether they can borrow money from Venmo through Venmo loans.
A loan is typically an amount of money that one or more individuals or companies borrow from banks or other financial institutions to repay before a scheduled date.
While a loan might be highly beneficial, it also comes with the constant anxiety of becoming in debt.
Venmo is a popular app with millions of users, but if you are a regular user who might get a loan, Venmo would probably be the last place in your thoughts.
It's obvious because when we talk of places to get loans, the first places to come to our minds are banks and credit unions.
If you're a Venmo user, then you should be aware that you can borrow money from Venmo; — it is more like Cash Advances.
That said, this Venmo loan guide focuses on showing you how to borrow money from Venmo.
IMPORTANT UPDATE!
Venmo does not offer loans to users as of this writing. However, the Ledge loan, which is facilitated by Venmo, is an option for getting a Venmo loan. We'll see how to get a ledge loan from Venmo later in this guide.
Table of Contents
What is Venmo?
Venmo is a mobile payment service based in the United States that was created in 2009 and has been owned by PayPal since 2012.
Venmo was created to help friends and family share bills, such as movie tickets, food, rent, or event tickets. Account users can send money to others via a mobile phone app; the sender and receiver must both be residents of the United States.
In 2021, the company processed $230 billion in transactions and earned $850 million.
Venmo displays every peer-to-peer transaction (except the amount) by default, a feature that researchers have found to reveal sensitive information about users' lives in some circumstances.
The company reached a settlement with the Federal Trade Commission in 2018 for various privacy and security issues relating to this and other services and made adjustments to the settings as a result.
Venmo, on the other hand, has been chastised for putting users' privacy at risk.
Can You Borrow Money From Venmo?
Yes, you can borrow money from Venmo and get up to $5,000 in Venmo loans.
If you are a verified Venmo user, you can lend up to $5000, but if you are an unverified user, you can only lend $50.
Venmo's Annual Percentage Rates (APRs) typically run from 14.99 percent to 23.99 percent, depending on the account type you have.
Venmo, like traditional bank loans, will deduct a small amount from your cash balance each month as an interest cost until the loan is entirely paid back.
Also Read: How to Borrow Money from PayPal
Types of Venmo Loan
There are two types of Venmo loans:
- Venmo Instant Loan.
- Venmo Ledge Loan.
Let's see how each loan works.
How Does Venmo Ledge Loan Work?
Venmo serves as a kind of middleman between users when it comes to Ledge loans. Peer-to-peer (P2P) transactions are what gave rise to the original name of Venmo.
Peer-to-peer transactions enable users to send and receive money, pay bills, and transact.
The good news is that loans can also be obtained through peer-to-peer transactions. Ledge Loans originated from a P2P transaction scheme.
Everyone who is interested in a Ledge loan typically launches a campaign.
The campaign would not be treated seriously unless this person is a registered and verified Venmo user.
The campaign must describe how much money is required, why it is required, and most significantly, how long it would take the borrower to repay the money.
Venmo users who are interested in lending this person money will express their interest on the app.
As soon as the money is completed, Venmo provides the borrower the money, calculates the money plus interest for the people who have lent the money, and as the person pays back later, the money is transferred back to the accounts of the people who contributed.
Also Read: How to Borrow Money From Cash App
How Does Instant Venmo Loan Work?
An instant Venmo loan is a loan given by Venmo to borrowers instantly.
There is a limit, though. On the app, instant loans are also known as cash advances.
Cash advances and bank credit cards have a lot in common.
It's crucial to remember that a small amount of money must be paid before Venmo can grant cash advances.
Venmo only allows users with verified accounts or new users to borrow up to $50. Verified users, however, are only permitted to borrow up to $5000.
The restriction on how much a person can borrow at once is a drawback of Venmo Instant Loans.
Although $5000 may not seem like much, the good news is that Venmo instant loans can be used 24 times a year.
Wonderful, isn't it? The cycle can continue as long as the initial loan is repaid, at which point another can be obtained.
Venmo withholds a specific amount of money from instant loans until the borrower has repaid the debt.
It is recommended that you have a verified account and also verify your identity in order to benefit the most from a Venmo fast loan. For Ledge loans, identity verification is also crucial.
Can You Take An Instant Venmo Loan?
Yes, you can not only borrow money on Venmo, but you can also take out instant loans!
So, if you're in a pinch, Venmo will come to your rescue.
Keep in mind, though, that you'll have to pay a small fee to receive the money right away.
Also Read: How to Borrow Money from Chime
What Are The Requirements For Getting A Venmo Loan?
Venmo does not offer loans to just anyone, but this does not imply that there is a lengthy application process.
Being a verified Venmo user or having a verified account is the most crucial criterion for receiving a sizable loan through Venmo.
You must have a registered account with Venmo in order to apply for any loans through the service or simply to become a verified user.
The difficulty arises at this point since a Venmo account is necessary. The four primary requirements are outlined in order.
- You need to be at least 18 years of age to create a Venmo account.
- You must be a U.S. resident or citizen since Venmo works only within the United States.
- You need an active cell phone to send and receive messages.
- You must have the latest version of the Venmo app installed on your phone.
Knowing that getting a loan is impossible without fulfilling requirements 1 through 4 is the same as knowing that getting a Venmo account is impossible without fulfilling those prerequisites.
If you are eligible for the loan you desire but do not yet have a Venmo account, create one, verify it, and then apply. You'll definitely receive it.
How Do I Get A Venmo Loan?
You must be wondering how to get the loan now that you know you can borrow money from Venmo and what requirements you need.
It is quite straightforward, as was already mentioned. All you need to get approved for a Venmo loan is a verified Venmo account.
Some people like skipping the account verification process for confidentiality reasons. If you want to borrow money, this is not a wise decision to make. It is quite easy to become verified on Venmo.
Here's what you'll need to verify your Venmo account:
- Your full legal name.
- Your home address.
- The last four digits of your SSN or ITIN.
You can also choose the "I don't have an SSN" option if you don't have a social security number.
Keep in mind that Venmo may determine that the information you submitted is insufficient to verify your account.
In that situation, Venmo will contact you and request further verification documents, such as your U.S. passport or driver's license.
Once then, it could take up to three business days for your account to be validated after we review the updated information.
Follow these steps to verify your account and get a Venmo loan:
- Open the Venmo app on your phone.
- Tap the three horizontal lines on the top left corner of the screen.
- Tap "Settings" scroll down to find "Security," and tap it.
- Select "Identity Verification," and a "One-Time Security Check" page will pop up, then tap "Next."
- Enter the information needed, like your name and date of birth.
- Select "Next" and follow the remaining directions.
What Interest Rates Does Venmo Charge for Venmo Loans?
Venmo charges an annual percentage rate (APR) that ranges from 14.99 percent to 23.99 percent.
Venmo's fee % is mostly determined by the type of account you have.
Type one accounts have the lowest interest rates, while type three accounts have the highest rates.
Type two accounts are in the center.
Why Take a Venmo Loan Instead of a Bank Loan?
With over 52 million active users, Venmo is one of the most popular money transfer applications in the United States, so it's only natural for the company to expand its offerings by offering loans.
However, the question remains as to why you would take a Venmo loan in the first place.
Why not take out a regular bank loan like everyone else?
Venmo loans are more appealing than bank loans in part because they do not require a credit check.
The first thing a bank looks at when you apply for a loan is your credit score.
People have been turned down for loans in the past because of their poor credit scores.
Fortunately, you won't have to worry about it using Venmo.
Also Read: How to Borrow Money from Varo
What's the Maximum Amount You Can Borrow From Venmo?
If you're just getting started with Venmo, you'll only be able to borrow $50.
A verified account, on the other hand, would allow you to take out a $5,000 loan.
The good news is that verifying your account is completely free.
You'll also have the added benefit of being able to take a loan 24 times per year if you do so.
However, you must pay off your previous Venmo obligation before taking on a new one.
So, in theory, Venmo allows you to borrow up to $120,000 per year.
How Does Venmo Get Their Money Back if You Don't Pay?
The ability to borrow $5,000 up to 24 times a year sounds like a great offer, but you might be wondering, "What's stopping me from taking out a loan and not repaying it?"
In that situation, we'd want to let you know that Venmo provides a few options for reclaiming your funds; here are a few of them:
1. Take Money Straight From Your Venmo Balance
If you don't make the payments to Venmo, they have the legal right to deduct the amount owed from your Venmo balance.
2. Take the Money From Your PayPal Account
Venmo is owned by PayPal, and it's part of the user agreement that Venmo can deduct money from your PayPal balance if you owe them money.
3. Report You to a Debt Collection Agency
Venmo will report you to a debt collection agency if you do not have money in your Venmo balance or do not have a PayPal account/balance.
If you refuse to pay what you owe, a debt collector can and will sue you.
Can I Use Venmo For Cash Advance?
Yes, you can use Venmo to get cash advances — however, there are fees involved with cash advances.
When you send money to a friend, for example, you may be charged an extra fee based on the dollar amount or the percentage rate—whichever is greater. They may also impose extra cash advance service fees, such as a higher APR.
Things could start to stack up! Check with your card issuer about any fees that may apply.
Frequently Asked Questions
Can I borrow money on Venmo?
Yes, you can borrow money from Venmo through the Venmo Ledge loan.
Does Venmo let u borrow money?
Yes, venmo let's you borrow money through Ledge loan where Venmo itself will act as a middle man.
Final Thoughts: Venmo Loan
Venmo is a mobile payment service based in the United States that was created in 2009 and has been owned by PayPal since 2012.
If you're still working on your credit score or need an instant loan, Venmo's loaning services are a great option.
Not to mention, Venmo's interest rates are fairly affordable when compared to some of the other options available, especially given the ease of the process.
The sole disadvantage of Venmo loans is the low borrowing cap of $5,000. However, this could change in the future.