Getting loans has always been a difficult procedure to go through. Either you want it for personal purposes or business, being the receiver or the giver is always a fuss. As in the past, when you apply for the loan, the bank goes through your history and rejects or approve according to the money you make and the credibility you have. But there is another way to make things easier for lending money.
It is known as peer to peer lending. It works differently than the traditional way of getting a loan. When you get a loan from the bank, the bank used the number of other depositors and their assets to give you funds, but in peer to peer lending, there is the platform which connects the perfect match of borrowers to investors.
Investor meets the borrower and selects which type of loan they want to lend. This service is most commonly used for small business and personal loans. This process helps on some platform such as some website which collectively known as peer to peer marketplace.
How do sites set their prices?
These sites set rates and terms and help in a transaction. Many websites work on this principle and provide a wide range of categories according to the credibility of the applicant. Investors have to make an account on the website and have to deposit some amount, which the website distribute in different categories.
The borrower has to make an account too and will mention the details about the problem he faces and wants a loan for and the interest rate at which the applicant will pay back. You have to provide information like name, address, email id, outstanding debts and source of income.
Documents like a verified photocopy of your id and other business related details if it is a business loan. The transference of money, such as interest and transaction, are done by the platform. The applicant just has to review the offers and have to select one.
Benefits of Peer to Peer Lending
This market is quite a good place both for investors as well as the borrowers. Investors, after giving the loan, enjoy the monthly interest. It increases there saving more than that of other conventional ways.
And for borrowers, it is a great opportunity to get yourself free from credit card debt which such low interest. It is a fast and easy online service which provides a specific amount according to the suitability of the borrower. So that it does not overburden a soul.