Peer-to-Peer Lending: It’s Beneficial for Both Lenders and Borrowers
Peer-to-peer lending platforms issued nearly $2.4 billion worth of loans in the past year alone.
Since their inception in 2005, peer-to-peer installment loans, often referred to as p2p installment loans, have helped a variety of lenders and borrowers in a number of different ways. However, the key to having success with these types of loans is finding the right platform to use.
Further, failing to do an adequate amount of research before either lending or borrowing money for a peer-to-peer platform can cause a lot of problems. The last thing anyone wants is to be taken advantage of due to a lack of research.
Once you’ve done that research, though, following are some of the benefits you can enjoy using peer-to-peer loans, whether you’re a borrower or a lender.
1. Borrowers Can Take Advantage of a Simple Application Process
If you are looking to borrow money via a peer-to-peer lending platform, then you are in luck. These platforms have a very easy application process. Usually, you will be able to fill out all of the paperwork for your loan without having to leave the comfort of your home.
Typically, you will be asked to provide information about your income and the assets that you have in your name. You need to make sure you are forthcoming about all of these details so the peer-to-peer platform can accurately assess your eligibility for their loans.
When trying to get a loan from a traditional banking institution, you will usually have to jump through a variety of different hoops. Often times, these financial institutions will take a long time to either approve or deny a loan. This can be problematic if your need for money is time-sensitive.
Rather than having to deal with the stress of trying to get financing through a traditional bank, take advantage of the easy-to-use application process provided by peer-to-peer lenders.
2. Lenders Can Spread out the Risk
Generally speaking, the loans that are issued on a peer-to-peer site are done in small increments. This means that if a lender wants to put $1,000 of their money on a platform, they will usually have it spread out over a number of different borrowers.
That way, not only does a lender have a higher rate of return, they are far less likely to have all of the money they issue as loans result in default.
Before using a particular forum, lenders will need to do their homework. Find out how long a peer-to-peer lender has been around and what type of track record they have before putting your money on their website.
3. Reasonable Interest Rates for Borrowers
Some people think that peer-to-peer lending charges high interest rates, such as title or payday lenders do. The fact is, however, that most peer-to-peer lending platforms charge competitive interest rates, often lower than borrowers will find elsewhere. This means you won’t have to worry about paying double for the money you borrow.
Shopping around with the various peer-to-peer sites will help to ensure that you choose the right one. Conversely, rushing through an important decision like this will only lead to problems. The time that you put into this research will pay off when you are able to get a loan for a low interest rate.
4. Lenders Get to Select the Borrowers They Want to Work With
When working with a peer-to-peer lending platform, lenders are able to choose the borrowers they want to work with. Generally, the lending platform will provide lenders with a list of suitable borrowers. This list will include information like the borrowers’ credit scores and income. By looking over this list, a lender will be able to pick out the borrowers they want to work with.
Will Peer-to-Peer Lending Work for You?
The key to having success with these loans is choosing the right platform to work on. Both borrowers and lenders need to take their time and do their research carefully. Each will want to figure out which peer-to-peer platform is the right one for their needs.