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What Is Peer-to-Peer Lending

Do you want to buy a new car or a new house or anything but you don’t have enough money? if yes this article will be for. You might think of using credit cards or taking a loan from a bank but you will have to bay high-value lending and it takes a long time to get the approval but Peer-to-peer lending, known as p2p lending, is the best solution for borrowing money.

What Is Peer to Peer Lending?

It is known as P2P and It has become incredibly popular in recent years. P2P is the practice of lending money to individuals or businesses through online services that match lenders with borrowers.

Peer to Peer also known as crowdlending They are made to an individual, company or charity. Other forms of peer-to-peer lending include student loans to help teenagers, commercial and real estate loans, payday loans, as well as secured business loans, leasing, and factoring.

P2P has become very popular in recent years. P2P online platforms lent more than $5.5 billion in 2014 and the industry as a whole is currently valued at $3.3 billion.

Simply lenders, the people who give money, choose the loans they purchase with the rates they want and put it in lending platforms so the borrowers could borrowers the money, but it’s possible for investors to build entire portfolios of loans with various interest rates and risk levels.

So, if you think of using P2P lending way as a borrower or a lender you should know the pros and cons of it.

The Pros of P2P Lending

-Lower interest rates
The best thing in P2P lending that it ensures lower interest rates to the borrowers unlike the bank loans and credit cards. 

Higher returns to the investors
P2P provides high returns to the lenders an even higher than the other types of investments.

-A more accessible source of funding
A very easy way for borrowers because lending is a more accessible source of funding than conventional loans from financial institutions. It may be caused by the low credit rating of the borrower or atypical purpose of the loan.

The cons of P2P Lending

-Doesn’t provide a large amount
P2P lending, unlike banks, doesn’t provide borrowers with a large amount of money. You cant borrow a million dollar from it.

Credit risk
P2P loans are exposed to high credit risks. borrowers who apply for P2P loans possess low credit ratings that do not allow them obtaining a conventional loan from a bank. 

-No government protection
 The government does not provide insurance or any form of protection to the lenders in case of the borrower’s default and this is one of worst things in peer-to-peer lending.