Have you heard about P2P lending? Many people may have heard about the practice, but they may not know where to go to engage in it or learn more.
Peer-to-peer lending, also known as P2P lending, is simply bankless banking. Borrowers and lenders are digitally matched on P2P platforms by the third-party facilitation companies that oversee such platforms.
P2P borrowers are vetted based on their ability to pay back the loan and their reasons for needing the loan. And P2P lenders can invest in borrowers, or loan them money in the hopes of increasing eventual returns, based on scrutinizing borrower online profiles.
Whether you are a P2P borrower or lender, it’s important to find the right P2P platforms relative to your needs. Having the right platform will yield best interest rates and funding options.
However, finding the best P2P platforms can be easier said than done. This is especially true if you don’t know anything about the P2P lending industry or engaging P2P platforms.
The P2P lending business is a global behemoth, and learning about it can be overwhelming to anyone not used to it.
The Dawn of P2P Lending and Platforms
The traditional bank loan processes of the 20th century were too prohibitive to every person before the 2008 global financial crisis. After the crisis, and after big banks got bailouts, the everyday person got left out in the cold.
After 2008, it became virtually impossible to get a traditional bank loan since the big banks barely survived the financial crisis themselves.
And that is exactly why the P2P lending industry exploded in popularity in the succeeding years. Additionally, the P2P lending industry opened doors of opportunity for both borrowers and lenders like never before.
The typical P2P lender could make as much as 12% interest on the average loan. And borrowers had more options to secure a loan.
However, because the P2P lending industry exploded so brightly on the scene like a supernova, engaging on P2P platforms became an overwhelming experience for some.
So, here is what you should know about P2P platforms before you borrow or lend. Compare platforms, do your homework, and be picky.
More Options
For the everyday borrower in search of a loan, P2P platforms offer more options to find a lender relative to relying on traditional bank lenders.
Borrowers have to build a profile on a P2P lending platform and submit personal and financial information. Such information can include, but isn’t limited to, employment data, credit history, debt-to-income ratio, credit score, and purpose of loan.
If you are a borrower, look for P2P platforms that have been in service for a few years and who offer lenders return rates over 10%. Such P2P platforms have well-vetted borrowers and are likely to attract more lenders which in turn maximizes your chances of securing a loan.
Portfolio Diversification
Are you a P2P lender? It’s important to find the right P2P platform that has a lot of quality borrower profiles. Quality matters more than quantity in this case.
A good P2P platform will have a lot of well-vetted borrowers for you to peruse. So, you offer small amount loans to hundreds or thousands of borrowers and design a well-diversified investment portfolio based on the projected returns you will receive.
Choose Your P2P Platforms With Strategic Care
You can check out some of the internationally available P2P platforms at P2PPlatforms.com. On this website, you can quickly get an overview of each platform and read reviews about them. But it is highly recommended that you also do your own due diligence about the platforms before you use them.
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