5 benefits of peer-to-peer lending

Using peer-to-peer lending, borrowers and lenders can connect and conduct transactions online. The term of these loans ranges from one to five years. The best part is that the borrower needs to pay only a fixed amount every month that gets auto-debited from their bank accounts. Also, it eliminates the need for physical contact with the lender. Though you should note that there are origination and deducting fees on loan repayments that the online platforms charge.

  • Easy to acquire and easy to start You might get intimidated by the very thought of taking a loan because the process that ensues is complicated. Also, you may believe that you have to be well versed with a lot of financial jargon if you do not wish to bear loses. However, with peer-to-peer lending, you do not need to worry about any of this. As far as the application is concerned, the whole procedure can be completed in less than an hour.
  • Funding is speedy The availability of funds is of prime importance for borrowers. Peer-to-peer lending is famous for its speedy delivery of funds to its borrowers. Depending on the size of your loan, also known as the ticket size, you may receive the funds in one-three weeks. For instance, loans with a value of $5000 can be funded in less than a week.
  • Lenders can spread their risk With peer-to-peer lending, lenders find an alternative to small interest rates that are provided by traditional banks or a lender looking for an option other than investing in the stock market. In certain cases, investors can enjoy interest rates that lie anywhere between 3-8% while spreading risks across a variety of different kinds of loans.
  • No charges for prepayment In the case of traditional financial institutions that lend you a loan, if you decide to pay the loan before the due date, you have to bear charges. With peer-to-peer lending, there is no prepayment penalty in case you decide to repay the loan before the due date.
  • Starting capital requirements are low You must be aware that investing an amount or taking a loan, requires you to have some capital beforehand. But, there are many who might not be able to meet the minimum figure. However, peer-to-peer lending helps you in investing or taking a loan at just $1. With such small amounts, you can test the platform and know how a product works, before you invest all your hard earned money.

Due to the above-mentioned benefits, you can make use of a peer-to-peer lending platform both as a borrower who wishes to obtain loans and as an investor who wishes to make use of high-interest rates. Both the investors and borrowers can benefit from this hassle-free platform. Also, as a lender, you can diversify your portfolio with great investment options. If you still have doubts about whether or not it is safe to be part of peer-to-peer lending, be rest assured as the platforms are backed by stringent privacy policies, intricate algorithms, and transparent information.

Leave a Reply

Your email address will not be published. Required fields are marked *


4 things you must know about peer-to-peer lending

A popular alternative to traditional loans, peer-to-peer lending involves applying for a loan on an online platform. The loans are unsecured, i.e., no collateral is required, and they are financed by one or more investors or peers. Also known as P2P lending, this type of lending process was first started in 2005 by Zopa, a […]

Read More

Benefits of peer-to-peer lending to borrowers and lenders

Peer-To-Peer Lending (P2P) is the most common practice for money lending via the online medium to develop businesses. The companies of this service have promised to serve the people at a much cheap rate of the price than the financial institutions. Therefore, both borrowers and lenders are benefitted in a great way. In this article […]

Read More

Essential things to know about peer-to-peer lending

Peer-to-peer lending is a unique concept of financing where lenders and borrowers are brought together by online service providers. This is a cost-effective type of financing. What is peer-to-peer lending? Peer-to-peer lending is a concept where a service provider (usually online operates) brings together lenders and borrowers on one platform. It is also referred to […]

Read More