P2P Lending Summed Up
You have probable seen the term ‘peer to peer lending’ floating around and are looking to see if it is an option for you. Whether you’re an investor or are looking for a way to borrow some money, p2p lending could be an option for you. Read on to discover what peer-to-peer lending really is.
This 1 minute video explains the process very well:
Investors
The reason people invest with peer to peer services is because of the high interest rates the borrowers pay. The downside is that clients you will be lending to are generally high risk. This is because the people who go to these sites for loans are the same ones who are rejected from the banks and other lenders. This means they are extremely high risk.
Within the P2P service you choose to lend with, you’ll be able to choose who you lend to. These people will have a risk factor – the more risky the client the more interest you will receive.
Another reason peer to peer lending can be risky is because there aren’t any security measures in place to protect you. This means that if someone fails to make payments you aren’t guaranteed to get your money back. This makes the risk of lending even more risky.
Getting a Loan
If you are looking for a way to get a loan because you have already tried everywhere else, peer to peer lending could be the best option for you.
It’s important to keep in mind, though, that you’ll have to pay very high interest rates. Whilst these rates aren’t as extortionate as loan sharks, for example, you will end up paying a higher amount back by the end of it. This is important to take note of before signing up to such services.
Related Posts
RateSetter prepares to close the investing side of the platform →
MoneyThing enters administration →
Will a COVID vaccine improve peer to peer lending market? →
