Peer to peer lending - The full P2P lending guide

Posted by canythould43 on in P2P Lending
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Peer to peer lending as abbreviated as P2P lending is the practice of lending money to different unrelated people without going through traditional banking institutions processes. All the activities take place online on the companies’ websites after going through credit checking tools and using different lending platforms.

It is also known as crowdlending. There are many of these companies in the United states that offer students loans, payday loans, secured business loans and real estate loans. Interest rates are fixed by lenders that mostly are very low for competition.

Although many people like P2P lending because of its low lending rates, the truth is their benefits are not very profound. Getting out of debt is crucial, but the process is not that fun. Making monthly payments is a real chore. Investors also take a long time to make meaningful dividends, but it remains one of the best ways of lending money.

Why Many People are Benefiting from P2P Banking

Whether you are looking for a loan or some type of banking investment, P2P banking is one of the best options for most people. If you are new to the idea of peer-to-peer banking, you probably do not know what it is all about or what types of information happens to be available. This is why it might be a good idea for you to consider this option if you want to get a great rate for any type of loan that you will be able to find from any local financial institution.

One of the main benefits to P2P banking is that you will be able to find competitive loan rates. The main problem with going to a local bank for your loan is that they all pretty much offer the same type of rate. This rate can be incredibly high and difficult to afford. When you are making use of peer-to-peer banking, you will be met with competitive rates and not have to worry that you are spending a small fortune on it all.

Peer to peer lending guide – not sure where to start?

The first step that you will want to take is to find a company that offers peer-to-peer banking options. These will allow members to offer loans to other individuals at great rates. In general, this type of banking acts a bit like an auction and people will bet on loans depending on the interest rate that is offered.

Because of this, the process of getting a loan like this can be a bit competitive, but it is well worth it when you are able to get the loan that you need to get on with your financial life or investments. You will also feel confident in knowing that your choice on a loan is met with amazing interest rates.

Unlike typical banks, you can find great rates with this type of banking. Between loans to investments, peer-to-peer banking options are ideal for all types of people. You can quickly get the financial needs that you want without all of the problems that go with getting approved by a bank.

The auction-type loans will help you to get an amazing rate without worrying that it is going to be too pricey. You will want to consider working with a financial expert if you need information on beginning the process of peer-to-peer banking. If you are new to the concept, it is always best that you get help from an expert in this field.

You will love that banking with peers can be a great way to get competitive rates and loans that are perfect for your needs. You will love that you do not have to worry about getting a high interest loan offered by local banks because they are less lenient with their interest rates. Your loan should be something that helps you financially and not something that is going to become a problem for you when it comes to paying it back. This is why so many people have been choosing peer-to-peer banking for their own needs and any type of loan that they might need to take out at the moment in order to get some extra funds.

Which Is Better, a Savings Account or Peer-to-Peer Lending?

People often worry about how they will manage to save enough money for larger expenses down the road, for retirement and or for any number of other issues. In fact, the concern about being able to save enough money to live comfortably is one of the major stresses that weighs on the minds of most individuals. If you are one of those individuals, you might be wondering whether you should put your money in a savings account and forget about it or get involved in peer-to-peer lending, also referred to as P2P lending.

The truth is, there are advantages and disadvantages to both of these systems. With that being said, it is vitally important that you fully understand what the potential benefits and risks of each one are so that you can make an educated decision concerning your future.

Advantages and Disadvantages of a Savings Account

A lot of people put their money in a savings account and hope for the best. It is understandable because this is the safest method of saving for the future. Unlike stocks and bonds, you don’t have to worry about having more money than you know what to do with one day and then having it all wiped out through no fault of your own the next. For many people, this alone is enough to make them decide what to do.

However, you might not have considered the idea that when you put money in a savings account, any money that goes into the account is largely what you are capable of putting there yourself. This means that you are taking a chunk of money out of your own paycheck in order to have any hope of saving money for the future. Money that is earned from the cash that is already sitting in the account is typically not even enough to get your attention. This means that your money is not working for you when that is exactly what it should be doing.

Peer-to-Peer Lending

Essentially, this is a form of lending that uses a certain platform in order to help people decide which businesses they should invest in. It is safer than typical stocks and bonds and there are several other things about this type of lending that are quite beneficial. For one thing, you have greater control over your decisions and thus, over your money.

There is also the potential for greater earnings because you are directly involved with the business that you choose. If it does well, so do you. Because you have a personal stake in it, it gives you more control over choosing a business that will be successful in the future. It also gives you the opportunity to be involved in selected businesses that you have a genuine interest in.

Potential Risks

Of course, there are risks involved in everything, especially things that are really worth doing. When it comes to peer-to-peer lending, the risk is that you will invest in a business that might fail. If it does, you might not get a return on your investment like you had expected. This is especially true if the business fails shortly after you have made the decision to invest because it gives you very little time to recoup any of that money. These risks can be minimized by doing your homework and investing in businesses that have a proven track record.

The very idea of taking risks with your money is a little frightening. However, people that are unwilling to take risks are usually the ones that end up paying the price for it in the end. You have probably heard the saying that little risk offers little reward. For the most part, this is true. If you want to have the potential to grow your wealth and do it in the safest way possible, peer-to-peer lending is definitely something that you should look into.

Why P2P Lending Should Be Considered As Safe

No one ever thought that one would be able to borrow money at the comfort of their house via the internet and get it instantly. But today, peer to peer investing services or crowd lending as it is commonly referred to, has come at a right time. P2P as it’s usually abbreviated, was innovated in the year 2005 by a firm Zopa in United Kingdom and since then it has welcomed and used in a number of countries and those who are said to have benefited much are the small sized business enterprises who were shunned down by the banks there before.

Is P2p Lending safe? Here is the process involved

In this setup, a borrower visits an intermediary who is an online site fills the necessary documents online and the intermediary gets the money from the lender and gives it to the borrower in no time. The intermediary does the following to ensure that the lender and borrower are satisfied:

i. He markets the services to both the lender and borrower,

ii. Ascertains the creditworthy of the borrower before granting a loan,

iii. Acts as the link (intermediary) between the borrower and the lender.

Benefits of Peer To Peer Lending To the borrower

i. One is able to access a loan at the comfort of wherever one maybe provided there is internet connection,

ii. Most small scale business people and even students can now access a loan without much hustle compared to how they were treated by the banks in the past.

iii. Loan processing time isshort and easy,

iv. The interest rate is lower compared to other financial institutions

v. There is no rate increment, it’s a fixed amount, and in case one pays earlier than agreed there is no penalty charged,

vi. Lower charges for loan processing.

Benefits of Peer To Peer Lending To the lender

i. One does not need to have an office, they are online services only

ii. The interest charged which is lender’s return is substantial

iii. One does not require to employ a number of professionals to look after the operations, only a few compared to what financial institutions employ to run their various branches

iv. Compared to other types of investments like in the security markets, peer topeer is more reliable, no fluctuations if well monitored and controlled

v. When you lend to someone, you give that person some freedom unlike when dealing with the credit cards.

Everything has its pros and cons and p2p is no exception but its advantages surpasses its disadvantages. This service has so far transacted with lots of billions and some governments have used this channels to give money to the citizens, the future is bright.

It should be noted that to be able to eliminate the question of whether the op2p is safer, firm measures need to be undertaken to keep in check the default rate. It has been reported of some firms collapsing and moving out of business with a 100% default rate. It’s an alternative financial service provider and its operations has provided a passive way to earn some interest on cash and it’s a positive effect of technological advancement.

Will the P2P Lending Platform Survive?

The P2P lending platform is going to manage well if people are going to be willing to invest. The problem today with the lending platform is that it looks more like charity than it does like a good idea. There are a lot of platforms that people do not think are safe, and there are even more people who want to have a more solid platform to use. You have to understand how the platform works before you would use it.


People are going to want to have a way of making sure that the loans are paid back because people want to help if they are going to be safe. This means that people are going to have to look into the protection plans that are going to make it much easier for people to get the help that they need. You might want to give people the money they need, but you want to be as protected as a bank. You want to have a contract and a platform where someone is going to pay you back.


There are a lot of people who are going to be able to read reviews that are going to tell them that some of these platforms are not going to be safe. People are going to get scared away from some of these platforms, and that is going to make it much easier for people to say no. People are going to have to dig deeper to make sure that you are going to go to the place that you are going to feel much better about where you are spending your money.


You want to be able to learn as much as you can about the people that you are loaning money to, and you want to find a P2P platform that is going to help you make sure that you are comfortable. You are going to want to feel much better, and you are going to be able to stay safe if you are doing a lot of lending. No one has tried to really make a business out of this yet, but the setup could help people make sure that they are going to do it right every time.

The Companies

You have to make sure that you are going to use the companies that you believe in the most. A lot of these sites have missions that you will believe in, and you are going to have to make sure that you are going to pick out the company. This will help keep the platform alive, but that means that people are going to have to do some research to make sure that they are going to be lending to the right people.

Everyone who wants to lend on a P2P platform needs to make sure that they are going to get better results by making sure that they have picked the right place to go. People that do not feel safe will not lend, and the industry is going to have to do some work to help make people feel as safe as possible when they are lending.

I like to take risks, That's how I make money. But they are calculated risks.


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Guest Sunday, 17 November 2019