If youhave ever been to a traditional bank for a loan, you might be aware of the longprocess involved in the procedure. Peerto peer (P2P) lending also known as person-to-person lending is an alternativeto the traditional way of taking loans which are getting more and more popularwith time due to the many benefits it offers. In banks, the loans are givenaway from the assets, which are the deposits made by their customers. With P2Plending, borrowers get directly connected with investors through differentplatforms. The investors select the loans on which they want to invest. The loan varies from personal lending tosmall business loans. Even though some companies restrict what type of peoplecan invest, but there are companies which are open to everyone, as long theaccount minimum amount is met.
Thesedrawbacks gave rise to peer-to-peer lending. It is becoming one of the mostpopular platforms among both the borrowers and investors. Let's look into the benefits that p2p offersbooth to lenders and borrowers:
Benefits for investors:
1. NoMiddlemen:
If you are an investor and is looking fortaking a loan from a bank, you need to answer a number of questions like whereare you going to invest the money, how much you want to earn or is it someoneelse you want to lend the money to. Whereas in p2p lending the interest rates and the amount is decideddirectly by the investors and borrowers without any interference.
2. Stability:
If you arelooking for a safer option, then p2p offers that to you. P2p lending is muchsafer and comes with minimal risk compared to the risk of investing in otherinvestment options like equity markets which come with a higher risk factor.
3. A steadysource of passive income
Whodoesn't like a passive income? A passiveincome is the earning you get without putting any effort and which comes in aregular interval. And it is up to you to reinvest, use it or save it. With P2Plending you start generating a passive income along with the payments of yourloans based on the interest rates fixed against the loan.
4. Leave yourmark on someone's life:
Moneyplays a very important role in one’s life. Whether it's about getting yourdream house or sending your kid for higher education. But many times one can’tafford a loan because of various reasons. Through p2p lending, you are notgiving yourself a secure and good passive income, but also affecting someoneelse’s life in an empowering way.
Benefits of P2P Lending for Borrowers
1. No prepaymentcharge:
If youwant to close a bank loan early, the bank may charge a pre-closure fee of 2-4percent. While in case of repayment in P2P loan even after three months itdoesn’t attract any such charge. Also, there are only some banks who allow youto make a part-payment which is not the case with P2P loans.
2. Moreflexibility:
Banks havegot their own branch model and normally hesitate to give small ticket loans.P2P loans have more flexibility than bank loans. In p2p lending, if the lenderis satisfied post the risk assessment; you may get a higher amount of loandespite a credit score below 750. The borrower is evaluated on the basis ofability, stability, and intentions to repay which may reflect in his bankstatements and salary slips
3. Paperlessprocess:
In p2pthere is a facility for online loan application. That is beside the one-timephysical verification at the documented address, the entire process on P2Plending is done online. No need to waitin the queue, just scan and share the documents through your mobile.
P2P lending has been making a tremendous mark inthe financial sector and economic growth with the help of dozens of lenders andinvestors who are contributing to the growth of this industry. Today P2P is amultibillion-dollar industry with a
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