Peer-To-Peer Lending : Automatically Driven Financial Outreach Program

Peer-To-Peer Lending : Automatically Driven Financial Outreach Program

P2P lending has increased the adoption as an alternative for financing.

Peer-To-Peer Lending : Automatically Driven Financial Outreach Program :

Peer-to-Peer lending is gaining momentum day by day due to its features and qualities of financial inclusion. It acts as a lending platform that enables individuals in obtaining loans from other individuals. In simple words, it acts as a middleman. Various websites promote P2P lending. P2P lending has increased the adoption as an alternative for financing.

What Is P2P Lending :

P2P lending is also known as “Crowdlending” or “Social lending”. If we talk about its history then it has only existed till 2005 but the crowd of competitors is enabling it day by day. Few examples are Peerform, Upstart, and StreetShares.

Understanding The Concept of P2P Lending :

For understanding the deep concept of P2P lending we have to consider its features in the below-mentioned steps:

1. As we know that P2P lending websites help in connecting the borrowers directly to the investors. Every website has its rates & terms according to the transaction. The interest rates are also based on the creditworthiness of the investor.

2. An investor opens his/her account with the site and deposits money. The money gets dispersed in loans. On the other hand, the loan applicant posts his/her profile which is assigned to a particular risk category and it will determine the interest rate.

3. The money transfers and the monthly payments also get transferred through the website.

4. The whole process is automatically driven and user-friendly.

5. One thing that is important to consider is that some websites have specialization in a particular type of borrowers. If we look out for some examples like “STREETSHARE” is for small businesses and the Lending club has a customer-centric approach.

Analyzing The Involvement of P2P Lending :

If we talk about some past years then P2P lending platforms are seen to provide credit access to those people who would be spurned by the conventional institutions. But in the past few years, P2P lending sites have grown their reach and covering a large area. Home improvement loans and auto financing are also available at P2P lending websites. In simple words, we can say that P2P lending platforms have now become a way to generate the interest income on the cash that exceeds those suffered by the conventional bank accounts.

Wrapping Up :

If you are thinking to join the P2P lending sites as an investor then you have to become cautious about the default rates. It is advised for the consumers that always check the rates of transactions at the website before performing it. There are different methods of income generation of different sites and the rates may also differ. Like banks, sites can also charge the loan origination fees, bounced-payment fees, and other charges.,

Edited By Team CLIQTAX

Want to get your business journey featured on CLIQTAX ? Send an email to us at