Peer to peer lending can be the answer to all kinds of situations in which you need to get your hands on some cash. Maybe you want to reduce or consolidate debt, buy a car, start a small business, pay for a wedding or replace a washing machine that just died. Maybe friends and relatives can’t lend you the money, or you’re afraid the banks will deny your loan application. If you want to avoid accumulating credit card debt, peer to peer loans could be the solution for you.
On the other side of the equation, P2P lending can be a great opportunity if you’re looking for an innovative way to invest your money. As an investor in P2P loans, you can earn some passive income while diversifying investments and potentially lowering your overall risk.
One of the biggest advantages of peer-to-peer lending is that you can get approved easier than if you were working with a traditional lender. In most cases, you will have access to a large network of lenders to work with. Even though some of them may be skeptical of working with people who have bad credit, there will usually be several that will be willing to extend financing.
Another advantage of using peer-to-peer lending is that you will not have as many fees involved. When you work with a regular bank or lender, they will charge you an application fee, processing fee, and generally several other fees. When you work with another individual, most of the time you will not have to pay all of those fees.
By using peer-to-peer lending, you can also get access to your money quicker. With a regular lender, it may take weeks before you can get the money you need. With peer-to-peer lending, you may be able to get your money the same day that you apply for it.
Lenders can easily obtain favorable interest rates from the borrowers based upon the amount they borrowed. In this case of p2p lending, both the lenders and borrowers can stay closer to each other and can also have effective communication about the development of projects.
Lastly, P2P loans are unsecured, which means there’s absolutely no collateral required. This makes it a safer option than taking out, a second mortgage, home equity line of credit, or secured credit card. Loans are doled out based solely on your creditworthiness.