Peer-to-peer (P2P) lending is a lending type that happens between two people instead of involving a conventional bank or lender company. It avoids dealing with a middleman that can cost you another amount of money, allowing you to have more loans that you really need.
P2P can be done via online websites that involve payday loans and cash advance as well. It works when an investor is willing to provide money to fund loans. Normally, the amount ranges from hundreds or even thousands of loans which are categorized based on the amount of risk.
Using P2P has its own set of advantages, and here they are:
Easier application and approval.
A little information about the borrower is needed via the online application of certain lending company, and the approval time is really fast and quick. All you need to have is a gadget like laptop and of course, an internet access. It gives you an access to a huge number of lenders.
Lower and fewer rate of fees.
In P2P lending activity, it is guaranteed that the fees involved are lower such as the interest rate. Borrowers can also expect fewer fees to pay when they decided to avail this service. Unlike in a regular lender company or bank, application fee, processing fee, and generally several other fees are being charged with the borrower. P2P lenders can provide cheaper service compared to traditional bank or financial institutions, avoiding all the fees mentioned.
Usually, investors provide funds between one to three weeks, depending on the amount of loan. A $5,000 loan can be accomplished in just a few days or less than a week. Funding amounts can be higher over time and it will be beneficial to borrowers who want to put up a reasonable project or purchase.
P2P lending companies have only fewer requirements when applying loans. Borrowers only need to provide a solid reason on why he or she is getting such loan and lenders would have to think it over if they want to provide the money. Some P2P lenders require no penalties as well for the borrowers who are planning to use the fund to pay for debt.
P2P lending companies allow the borrowers to access their money in an instant. It is possible that borrowers might be able to get the money on the same day they apply for a loan. It does not consume a lot of time unlike typical banks and financial institutions.
P2P lending companies offer an impressive efficiencies in terms of borrowing money compared to conventional banking structure. So far, these are the things you need to know about P2P lending and now you have an alternative when it comes to borrowing money.