For people who would usually go to a more traditional lender such as a conventional and well-established bank, peer-to-peer lending provides an affordable, safe and viable alternative.
Peer to peer lending services are a newer way of accessing finance, that's more modern and, quite different from conventional banking. Many people display apprehension when faced with P2P lending as it seems to be new and overly complicated.
However, this is not so, and you can stand to reap a range of benefits that more traditional banks cannot offer.
What kind of benefits can you expect?
Well, peer-to-peer loans generally offer more competitive interest rates, faster service, convenient online access, and terms that are much more flexible than big banks have to offer.
Given it's online nature, convenience has never been more available as you can readily access funds within a matter of minutes.
Investors generally make themselves available to clients through these online services, and most peer-to-peer lending companies will have a list of what options you have at any time, with the costs involved disclosed right off the bat. This means maximum convenience and finance that is available at minimal cost.
P2P savings from lower rates
Peer to peer lenders have the ability to offer much lower rates than most average providers. Because of their online nature, they can acquire and deliver more competitive interest rates than a traditional bank or lender would.
They often have no brick and mortar building to pay for or be concerned with, less staff and therefore lower wage costs and, are more dedicated to passing savings onto the people using their services.
For this reason, they present an attractive way for individuals and businesses to access finance without running the risk of destroying their financial viability in the process.
Quotes do not affect your credit score
Peer-to-peer lenders also offer the convenience of being able to supply you with quotes that will not damage your credit. Loan refusals can have a negative effect on any client's financial history, and nobody needs that.
For this reason, they offer an initial quote that does not affect your credit score whatsoever. This is an extremely beneficial factor as you remain a financially viable customer when applying for finance later on.
P2P lending is a viable service
Although financed by investors rather than banks, peer to peer lenders offer a viable service as an intermediary between parties, these being you and the investor you need finance from.
This means that you never have to hear from or, contact the investor/lender in question, and all queries and concerns are taken care of by the company you have decided to secure your finance with. This ensures that the loaning process is quick, easy and hassle-free; exactly the kind of service you want when dealing with a lender.
How flexible are peer-to-peer loans?
Exceptionally. So much so in fact, that this is the reason many people decide to make the jump from traditional lending institutions in the first place. With 24 hour access to your loan information, funds and details, service has never been quicker.
You also have the pleasure of being able to change your repayment date, which means that you can personalize your lending experience on the fly.
This is a very attractive feature for many of the younger generations, who prefer to avoid pesky lines and queues at banks and, opt for the convenient online option, and of course the cheapest one they have available to them.
So, what are the drawbacks?
Peer-to-peer lending is not without its conditions. Given the nature of the online lending service as a whole, there are going to be different terms and conditions used as opposed to those you'd get from traditional banks.
#1) You need good credit
You're still going to have to pass a series of credit checks to ensure you qualify for access to finance.
This is to be expected, as the investor wants to make sure that they're going to get some sort of return for offering you finance. While this is off-putting, it is simply a fact of the business, and unavoidable at that.
#2) Application fees on P2P loans
There is also a possible application fee depending on which company you get your loan through. This is almost like a buy-in to be a part of some of the more exclusive groups of P2P lenders in the world.
This can be to protect the lenders whose finance may be defaulted on if the client fails to make payment altogether. Or as an arrangement fee by the peer to peer lending company itself for putting you in contact with the investor/lender and for the intermediary services they offer.
All of these costs are reasonable, as they are crucial to keeping the platform up and running.
Despite these factors, P2P is growing and has become exceptionally prominent in countries like China, the Netherlands and Japan.
The benefits it supplies its users with is undeniable, and serious financial gain stands to be made if, like with any traditional lending service, you use your loan carefully and thoughtfully.
Is peer to peer lending for me?
Well, there’s only one way to find out, and that's by logging onto a leading P2P lending site and apply or sign up for an account. In the world of business and global finance, it never hurts to be curious, and investigating what peer to peer lending can do for you is only the first step on a road that could vastly benefit you.
Think of all the money you could be saving by avoiding paying those high-interest rates and repayments that your traditional, conventional banks charge – when you could be paying much less.
Through the peer to peer online platform you may even discover you have access to a much wider array of funding amounts and types than you could have dreamed possible. But, of course, as with any financial move, exercise caution.