What is a peer-to-peer loan?
A peer-to-peer loan is a loan granted by one individual to another. This means that it is private individuals who lend money. Today it is also known as crowdlending and is a concept that is becoming more and more prevalent. However, it is not only private individuals who can benefit from peer-to-peer and crowdlending – it also applies to companies.
However, it is usually a private person who takes out a peer-to-peer loan because they want to borrow money for a project or a purpose that they cannot really get the bank to support. This type of loan actually works like a bank loan. The difference, however, in that crowdlending takes place is that a large number of people have come together to lend money online.
How does a peer-to-peer loan work, then?
Peer is English and means equal. It also suggests that it has something to say about the loan. A peer-to-peer loan is characterized by the fact that people with good savings choose to lend their money through an online platform. Here, they can lend money to both private individuals and companies that cannot or will not lend money in their own bank.
These can be both large and small amounts, as there are platforms that provide this type of loan to those who are interested in them. Therefore, they can borrow an amount made up of a pool of multiple lenders. For you as a lender it has no relevance, as you naturally just have to sit back and enjoy that you can make a return on this.
Benefits of peer-to-peer loans
There are several benefits to a peer-to-peer loan. This applies to both the lender and the borrower. If you want to borrow money, this is a good way to do it, since the requirements of banks are not nearly as high. Therefore, you can be almost certain that you can be allowed to take out a peer-to-peer loan from one of the many providers.
Not only that, you will often find that these loans also have lower foundation costs and interest rates than is the case in the banks. However, you should be aware that it is often required that you can provide some form of guarantee for the loan. It can be, for example, in the form of real estate, a car or a third type of asset that has a high value.
Who does a peer-to-peer loan apply to?
There should be no doubt that it is a loan that has come to stay. There are more and more people taking care of it and it is getting bigger and bigger. It is a type of loan that greatly appeals to those who cannot be allowed to borrow money in their own bank, because it is money to go to a project or purpose that the bank cannot or will not support up at.