Business & Finance Blog

The meaning of p2p lending

, / 1160 0

The way of borrowing money without using any common financial institutions is called peer to peer lending.

A website (which is a p2p service) collates borrowers and lenders, thereby it makes the process as much easy as possible for participants. The example of such website can be one of the best investing companies

Advantages of P2P Borrowing

Competent peer to peer lending investing can make a good passive income in the future.

Although a credit union or a bank can suggest a good loan, there some really interesting features of p2p lending which make it competitive too.

Related image

Costs are lower: when using online peer to peer lending, you get comparatively low rates for your loan. Together with a lender you discuss and decide which interest you will pay monthly, and I need to mention that the lender gets most of your pay. For example, while paying in the bank – part of the money you pay goes to a workforce, branch networks, etc.

Before you get a loan from your lender, be ready to pay an upfront origination fee, which can reach up to 5% of the sum of the loan. But it is okay and you can understand a lender too – he made his p2p lending investing, spent his time on it, and worked, you know what I’m talking about. You may think that it is quite high, but there is a plus too – if you get your second loan, your interest rate can be lower. And certainly there are some charges in the case of overdue payments.

Fast and simple: P2P loans are easy to get. The filling of an appeal isn’t difficult and does not take much time. You may often discover quite fast if your loan will be paid out for you or not. As lenders decide whether to give you money or not, the process of getting money may take several days.

Chance to everybodyP2P is not only about investing money it also fits those people, who have poor credit history. While the banks pay attention to your credit history and may refuse your request if it is bad, p2p lending gives a pretty good way out. Simple math – the worse your credit history is – the higher interest rate you’ll get to pay and vice versa.

How it Works

Firstly, when you want to borrow the p2p loan, select your lender and begin the application process. The lender, who invests in personal loans, may require some information of yours and there may appear a need to say how are you going to spend money. Then your lender checks your credit and if you’re suitable, your credit will be placed into a list for further lending.

On peer to peer lending websites it can take few days or weeks before your funding comes. Both receiving and repaying are used electronically. You have to pay out the loan over 3 or 5 years; also you can prepay without any penalties first – it will save your money on interest.

Reporting of the credit: there is kind of credit rate, which can be changed. If your loan is paid back in time, peer to peer lending interest rates will be better and it will be easier to borrow in the future. And if your loan payment was overdue, your credit rate will be lower – so if there is any problem with your loan – speak to your lender in time.

Is P2P lending safe?

As online capital investments and p2p lending Europe are becoming more and more popular, a lot of people ask: «Is it safe?»

The meaning of «safety» is quite subjectively, but most of the people, who lend money in p2p, are friendly to consumer. You shouldn’t worry about your personal information – it’s secure, your identity on the peer to peer lending sites is kept secretly. And the interest rates are competitive – comparing to those you can find elsewhere. So, make your own financial investments or borrowings and get money.

Leave A Reply

Your email address will not be published.