All You Wanted to Know About P2P Lending

All You Wanted to Know About P2P Lending

Peer-to-peer lending is a type of debt financing wherein lenders and borrowers enjoy the control and freedom over the terms of a loan. There is no intervention of the intermediary financial systems. Simply, it is the term used for defining the practice of lending money by individuals with the help of services that connects the borrowers and the lenders directly.

The core concept of peer-to-peer lending has been in practice for a long time now, in terms of social funding. Often we take the help of our friends and relatives in terms of financial crunch. The same thing is encouraged in peer-to-peer lending, where fellow members support each other. The only difference is that the lenders and the borrowers meet online with the help of a dedicated platform.

Looking at the various options available in the marketplace and the ever-growing community of the borrowers and the lenders, this concept is expected to reach newer heights. The platforms which provide facilities for peer-to-peer lending vary in their way of delivering services to the end-user.

The platform which you may want to choose depends upon the following factors:

• Networking: Some of the platforms match the borrowers and the lenders themselves and influence the process. This reduces the scope of selecting borrowers or lenders.

Commission: Some platforms have the business model that defines the earning based on the money which flows through their domain. They restrict the payments to be made through their transaction facilities.

Flexibility in lending and borrowing options: Some of the platforms disburse loans very easily while others make the process a little complicated. In some cases, even the interest rates might be restricted within the specified ranges.

The worldwide lending industry is a multi-billion dollar industry where people can borrow money from banks, other financial institutions and private lenders. The lending industry has certainly undergone an evolution and has paved the path for social or peer-to-peer lending, as a promising way of lending.

Now, the question that many of you would ask is whether the P2P loans offered at the social lending sites are worth it? The answer is yes. There are many positive aspects of digital loans. There are no banks, no middlemen and no long procedures. To top it all, the entire process is transparent for both the borrowers and the lenders.

The main objective of these social lending hubs is to offer online loans with the best rates of interest. The customers or the borrowers are given a feeling that they are borrowing the money from a community or a friend. This peer-to-peer lending & borrowing is considered in a new light now and has become an integral part of investing or borrowing loans.

Advantages of becoming a lender

A p2p lender enjoys certain other benefits from these platforms.

Creation of a new class of asset: Lenders on any of the peer to peer lending hubs can take the advantage of asset class which they can add to their portfolio as it does not come under any savings account or an investment.

• Active community participation: One of the salient features of these lending sites is that it makes the borrowers feel that they are taking the loan from a person and not from any organization. Thus there is a development of a strong community feeling.

• Choosing the rates of interest and loan repayment: This is another advantage shared by the lenders. There is a freedom and flexibility which the lenders can enjoy in terms of choosing the rate of interest as well as the period.

• Low investment risks: The lenders can enjoy low-risk investments as often the profiles of the borrowers are thoroughly checked before the money is spent. Another advantage is that the lender can choose to distribute his loan amount with other lenders, not bearing the risk all alone.

Keeping all these in mind, a huge number of players and MSME digital lending are showing growth. They are expected to grow to $80-100 billion in their annual lending process. New P2P lending start-ups are also occupying the market.

Similar Articles

5 Things You Should Never Do Once Your Loan is Approved

Applying for a home loan means preparing your finances for a lender and keeping them ready. Here are 5 things all potential home buyers should never do once they have applied with a mortgage officer or lender.

Many businesses depend on invoice discounting for getting instant access to funds

As a business owner, it is a difficult task to handle the cash flow. If you own a business, you are always on the lookout for funds to grow your business.

How To Change Your Mindset About Debt

When you are finding yourself in the throes of financial struggles, there are things you likely need to change your mindset surrounding money, spending, and debt. If you’re having a hard time with money, you’re not the only one.

Things to Know Before You Avail an Unsecured Business Loan

There are different types of loans available for businesses. An unsecured business loan has proved to be the best option, thanks to the high loan amount and flexibility in repayment. The loan does not require any asset to be hypothecated and the entire risk remains on the lender.

4 Tips for Surviving Summer Without Student Loans

We’ve all been there at some point, summer has rolled around and those savings we promised we’d make to help cover us over the summer months are non-existent. Now, you find yourself with no classes – and no money! Here four tips for surviving summer without your student loan.

unsecured business loan

As a business owner, you often face the requirement of funds. There could be a planned expansion or an emergency but the need for funds will have to be met. It is not feasible to always borrow from your friends and family time and again. This is why banks and financial institutions offer unsecured business loans that fit your diverse business requirements

Don’t Let Unemployment Make You Insane: Save Yourself with These Tips

Just lost the job that you really loved? You must be in denial and feeling stressed, but you need to tackle them in order to make a good move. 

car loans for bad credit history

You may have heard that it is not easy to get approval for a car loan if you have poor credit. This comes as a shock to those who are wishing to purchase the car of their dreams but have a credit history which does not allow them to do so. To all those people who have their hopes hanging by a thread, here is how you can get approved even with bad credit history.

auto financing options

Finding the perfect car is a dream come true for many. However, having poor credit can sometimes burst that bubble making it almost impossible to obtain your next dream car. Nonetheless, every problem has a solution and to achieve your goal of buying your dream car without a credit history, search for auto financing solutions online.