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Personal Loan Options: Demystifying Peer-to-Peer Lending

Wednesday, January 4, 2017 2:44
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By Newt Felix

If you are in the market looking to buy a personal loan, it is highly likely that you have come across myriad options. With the advent of the internet, there is more information flow and consumers now have even more choices of loans. Whether you are looking for a secured or unsecured loan, there are more innovative products powered by the internet. One of these is peer-to-peer lending.

While there is a lot of information available online, this loan is still unclear to most consumers. Like with any financial product, it is important to first understand everything about peer-to- peer (P2P) lending before opting for the same to fund your financial needs. Below is a short breakdown to help you make an informed choice:

Peer-to- peer in Brief

P2P is also called social lending and it lets two people to lend and borrow money from each other. The idea is to remove middlemen in the lending process just like other internet services have done. The two parties will opt for this type of lending and borrowing to leverage the benefits and it is covered by the Financial Conduct Authority (FCA) regulations. This type of lending has been facilitated by increased interconnectivity through the internet. P2P platforms are used to connect the lender and the borrower and also maintain security to protect all parties.

Benefits to the Borrower

Due to the ease of connectivity, there are many benefits of P2P lending and it is no wonder the trend has spread fast. This has become one of the main competitors to traditional lenders and for many good reasons. Here are some reasons borrowers are opting for P2P:

  • Faster approval: Borrowers enjoy faster and easier approval because only two parties are involved. The application process is also simpler and more convenient.
  • No risk to property: You don’t need any contract and your lender will offer cash after verifying your financial situation and ability to repay. Your credit rating will also play a big part in determining approval by a particular lender.
  • Better rates and fewer fees: Unlike traditional lenders, P2P lenders charge fewer fees. There is no application fee or processing fee and this makes it easier to repay your loan.
  • Flexible repayments: Unlike dealing with alarge institution, talking to another individual is easier and you can get a custom loan depending on your financial needs.

Benefits to the P2P Lender

As a lender, you can leverage the growing need for funding to get good returns. Some of the reasons to invest in P2P lending include:

  • Better returns: Your returns are higher than saving your money in a bank account.
  • Diversification: There are so many typesof customers to choose from including individuals, businesses, energy projects, real estate investors among others.
  • Legal protection: The fact that P2P is covered by Financial Conduct Authority (FCA) makes this a viable online investment.
  • Choice of borrowers: You have the freedom to choose who you want to lend to even if they don’t have a good credit score. Peer-to- peer is revolutionizing the financial industry and if you are looking for fast cash, this should be the first place to start.

Author Bio

Newt Felix is an online financial consultant working in Miami. He has worked in financing for over 17 years and is an authority on emerging financial services. He also writes on trends in the industry such as peer-to- peer lending.


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