There was only one place in the past to go for a loan: a local bank. In 2015, we have a lot more opportunities to borrow credit, and a person-to-person loan can be binding on a large number of borrowers looking for bargains – in addition, individual lenders are also looking for investment opportunities. Experience shows that peer-to-peer companies such as the IP Lending, PP Lending and Smile Lending are currently gaining demand and popularity at a rate that doubles their loans every 9 months. So what is the nature of peer-to-peer loans?
What is Individual Lending?
Peer-to-peer ( P2P ) lending takes place outside the banking and non-bank lending system, using algorithms that bring borrowers and investors together, based on each party’s requirements. These types of lending companies have only a few rules, because they are not banks – they act as mere intermediaries between borrowers and lenders, so fees and interest are lower. As the data show, last year Americans borrowed and lent $ 6.6 billion in this way.
What are the benefits of borrowing?
Borrowers with good or excellent credit history have the ability to get credit at a more competitive rate than banks offer. This aspect is particularly useful for credit consolidation – as IP Lending data show, borrowers who consolidated their loans recognized that they had paid about 7% lower interest payments after consolidating their loans. However, it should be remembered that credit consolidation does not always have the same results – the borrower has to implement several changes in his lifestyle so that he can make monthly and full credit payments. Also on this issue, individual lending companies can help. What other benefits does this type of lending have? Some companies are engaged in borrower profiling to build credibility and worthiness, including, for example, the borrower’s credit rating, work experience, education, and social networking activities. It should be noted that the entire application process is much more modern than in the case of other loans, for example, the potential customer has to fill in much less documents and the confirmation of the loan is obtained (or not received) within 2 days.
What are Individual Loans?
In short, they are everyone. Faced with the stagnation of interest rates on permanent deposits, investors are looking for new ways to profit or diversify their investment strategy, or reduce risk by investing in different assets. For most individuals, the loan repayment period is only a few years, so they provide a quick return on investment without stopping the flow of funds for a long period of time. It should be noted that the only disadvantage of this type of lending is the relatively high risk, which is why potential lenders have to carry out thorough research before lending – fortunately, there is a possibility in this lending market to diversify their investments into several hundred borrower loans.