Why choose P2P lending against traditional banking?

Why choose P2P lending against traditional banking?

If you have ever been to a traditional bank for a loan, you might be aware of the long process involved in the procedure. Peer-to-peer (P2P) lending also known as person-to-person lending is an alternative to the traditional way of taking loans which are getting more and more popular with time due to the many benefits it offers. In banks, the loans are given away from the assets, which are the deposits made by their customers. With P2Plending, borrowers get directly connected with investors through different platforms. The investors select the loans on which they want to invest.  The loan varies from personal lending to small business loans. Even though some companies restrict what type of people can invest, but there are companies that are open to everyone, as long the account minimum amount is met.

These drawbacks gave rise to peer-to-peer lending. It is becoming one of the most popular platforms among both borrowers and investors. Let’s look into the benefits that p2p offers booth to lenders and borrowers:

Benefits for investors:

1. No Middlemen:

If you are an investor and are looking for taking a loan from a bank, you need to answer a number of questions like where are you going to invest the money, how much you want to earn or is it someone else you want to lend the money to. Whereas in p2p lending the interest rates and the amount is decided directly by the investors and borrowers without any interference.

2. Stability:

If you are looking for a safer option, then p2p offers that to you. P2p lending is much safer and comes with minimal risk compared to the risk of investing in other investment options like equity markets which come with a higher risk factor.

3. A steady source of passive income

Who doesn’t like a passive income?  A passive income is the earning you get without putting in any effort and which comes in a regular interval. And it is up to you to reinvest, use it or save it. With P2Plending you start generating a passive income along with the payments of your loans based on the interest rates fixed against the loan.

4. Leave your mark on someone’s life:

Money plays a very important role in one’s life. Whether it’s about getting your dream house or sending your kid for higher education. But many times one can’t afford a loan because of various reasons. Through p2p lending, you are not giving yourself a secure and good passive income, but also affecting someone else’s life in an empowering way.

Benefits of P2P Lending for Borrowers

1. No prepayment charge:

If you want to close a bank loan early, the bank may charge a pre-closure fee of 2-4percent. While in case of repayment in P2P loan even after three months it doesn’t attract any such charge. Also, there are only some banks that allow you to make a part-payment which is not the case with P2P loans.

2. More flexibility:

Banks have got their own branch model and normally hesitate to give small ticket loans.P2P loans have more flexibility than bank loans. In p2p lending, if the lender is satisfied post the risk assessment; you may get a high amount of loan despite a credit score below 750. The borrower is evaluated on the basis of ability, stability, and intentions to repay which may reflect in his bank statements and salary slips

3. Paperless process:

In p2p there is a facility for online loan applications. That is beside the one-time physical verification at the documented address, the entire process on P2Plending is done online. No need to wait in the queue, just scan and share the documents through your mobile.

P2P lending has been making a tremendous mark in the financial sector and economic growth with the help of dozens of lenders and investors who are contributing to the growth of this industry.