What is Peer to Peer Lending?

I remember in high school friends referred to me as the “Bank of Marcus.” I loaned my friends money willy nilly because I had been saving my money since elementary school. What I never realized was that I could charge interest. Enter peer to peer lending.

Peer-to-peer lending is a type of lending in which individuals borrow and lend money to each other without the use of a traditional financial institution such as a bank. Peer-to-peer lending platforms match borrowers with investors who are willing to fund their loans.

Benefits to Borrowers

For borrowers, peer-to-peer lending offers a number of advantages. First of all, it is often easier to qualify for a loan from a peer-to-peer lending platform than it is to qualify for a loan from a bank. This is because peer-to-peer lending platforms take into account a wider range of factors when assessing loan applications, including things like social media activity and job history.

Another advantage of peer-to-peer lending for borrowers is that it offers lower interest rates than many traditional lenders. This is because peer-to-peer lending platforms are able to match borrowers with investors who are willing to accept lower returns in exchange for the opportunity to lend money.

Finally, peer-to-peer lending platforms often provide borrowers with more flexible repayment terms than traditional lenders. This means that borrowers can choose a repayment schedule that works better for them, rather than being forced to stick to a rigid repayment schedule set by a bank.

Benefits to Investors

For investors, peer-to-peer lending offers the opportunity to earn higher returns than they would be able to earn by investing in traditional financial products such as bonds and savings accounts. This is because peer-to-peer lending platforms typically offer higher interest rates to investors than banks do.

Another advantage of peer-to-peer lending for investors is that it offers the opportunity to diversify their portfolios. By investing in a peer-to-peer lending platform, investors can spread their money across a large number of loans, which reduces the risk of losing money if any one borrower defaults on their loan.

Finally, peer-to-peer lending platforms often provide investors with more information about the borrowers they are investing in than traditional lenders do. This means that investors can make more informed decisions about which loans to invest in and can feel confident that their money is being used in a way that they are comfortable with.

Peer-to-peer lending platforms have revolutionized the way that people borrow and lend money. By making it easier for borrowers to access loans and offering investors the opportunity to earn higher returns, peer-to-peer lending platforms are changing the way the financial system works.

The Market is Infinite

The global peer-to-peer lending market was valued at $26.6 billion in 2018 and is expected to grow to $897.85 billion by 2026, at a CAGR of 54.3%. The growth of the peer-to-peer lending industry can be attributed to a number of factors, including the increasing popularity of alternative financial services, the growing demand for unsecured loans, and the increasing use of mobile devices and social media.

Peer-to-peer lending platforms offer a number of advantages for both borrowers and investors. For borrowers, peer-to-peer lending platforms provide access to capital that they may not be able to obtain from traditional financial institutions. In addition, peer-to-peer loans tend to have lower interest rates than traditional loans from banks.

For investors, peer-to-peer lending platforms offer the opportunity to earn higher returns than what is possible with traditional investments such as stocks and bonds. In addition, peer-to-peer lending platforms offer a level of diversification that is not possible with other types of investments.

How Can I Get Started?

The following are some of the best peer-to-peer lending platforms:

1) Prosper: Prosper is a US-based peer-to-peer lending platform that was founded in 2006. Prosper offers personal loans, home equity loans, and auto loans.

2) Lending Club: Lending Club is another US-based peer-to-peer lending platform that was founded in 2007. Lending Club offers personal loans, business loans, and auto refinancing loans.

3) Upstart: Upstart is a US-based peer-to-peer lending platform that was founded in 2014. Upstart offers personal loans and business loans.

4) Funding Circle: Funding Circle is a UK-based peer-to-peer lending platform that was founded in 2010. Funding Circle offers business loans.

5) Zopa: Zopa is a UK-based peer-to-peer lending platform that was founded in 2005. Zopa offers personal loans.