Peer to peer lending is exactly what it sounds like: borrowing money directly from lenders and not from the banks. It is a great advantage that it does not involve any financial institution or banks, providing an opportunity for investors to earn high returns and borrowers to get quick loans at cheap rates. In addition, borrowers find p2p lending a great way to get funds and fulfil their emergency financial needs. In contrast to banks where you have to complete lengthy paperwork and even wait for the approval and get funds, p2p loans offer the borrowers a lot more ease and flexibility.
Here in this article, we are going to describe the top benefits that peer to peer loans offer to borrowers.
Are you thinking of renovating your home and giving it a modern look, or do you need money to buy your dream car? A personal loan may help you with these citations, but it is usually an expensive way of borrowing. You may be looking for a way of borrowing that is convenient as a personal loan but cheaper than a credit card. It is where peer to peer lending comes in. When borrowers find it challenging to get a loan at suitable rates from banks or traditional lenders, they look for alternative finance options. Peer to peer lending platforms has custom-made offers that suit borrowers’ needs.
In addition, custom made offers p2p platforms also offer unsecured loans, which means borrowers who do not have any valuable assets to use as collateral can also get p2p loans and fulfil their needs. You can get a p2p loan for any purpose, from settling debts to planning your wedding. You can also choose the loan amount and the loan terms according to your requirements.
Short Repayment Terms
The biggest pull for borrowers on p2p lending is that most p2p loans are short term loans. Typically, the loan terms range from three months to 36 months. Short term loans mean that you do not have to pay interest for a long time. The longer a loan term, the more interest you have to pay and also, you will be under stress unless you repay the loan amount. It is a reason that the borrowers take p2p loans for a small amount of time and also afford to repay them on time without any stress.
Another benefit of peer to peer loans is that they come with a low-interest rate compared to traditional bank loans. All of the p2p lending platforms operate online, so they do not charge overhead costs from the borrowers or investors and offer loans at a low rate. Due to this reason, people are highly attracted to p2p loans. Borrowers, especially the young generation, find peer to peer loans an excellent alternative investment and funding option, and they prefer to get loans from p2p platforms rather than from banks. However, you must keep in mind that the interest rate offered highly depends on the borrower’s credit score. The higher the crest score, the lower will be the interest rate.
No Early Repayment Charges
When you take a loan from banks or traditional lenders, and you want to repay early, you have to pay early repayment charges along with the loan amount and the interest rate. This fee is usually 2% to 4% of the loan amount. However, peer to peer lending platforms do not charge any fee from you if you want to pay the loan amount earlier. It means that if you have money to repay the full amount of the loan before the loan terms end, you can do it and get yourself out of debt. This way, you can also improve your credit score.
Quick Access To Funds
With p2p loans, you do not need to wait for weeks or months to get funds. The process of application is also convenient. You can choose a p2p lending platform and make an online application. The application approval process does not take more time than in traditional bank loans. This is because P2p platforms carry out a soft credit check that does not affect your credit score. If your loan application is approved, the funds will be transferred into your bank account, usually within 24 to 48 hours.
Usually, it is not feasible for banks to offer small loans because they operate on a branch model. Peer to peer loans offers more flexibility than traditional bank loans. You can get a loan for any purpose and for the terms that suit you. Moreover, you can also get a large amount even if you have bad credit if a lender is satisfied with our risk assessment. P2p platforms access borrowers from their ability and intentions to repay the loan, which can reflect their financial history and credit score.
No Lengthy Paperwork
All the process of applying for a p2p loan takes place online. You do not need to go through lengthy paperwork. You can even send the required documents through email or attach the application form through scanning. All of this makes peer to peer lending uk more convenient for borrowers, and they are more likely to go to p2p platforms instead of going to banks.
Other than these benefits, you also have access to a large number of lenders which means there are fewer chances of rejection of your loan application. Peer to peer lending platforms displays your loan application on a borrower’s list, where a number of lenders are already waiting for potential borrowers. You can get loans easily if you meet the eligibility criteria of lenders.
We hope that from this article, you understand the benefits of taking a peer to peer loan. Peer to peer lending platforms offers a wide range of loans such as personal loans, property and business loans. You can take a loan that meets your requirements. Due to benefits and flexibility, more and more individuals are taking p2p loans, and the number of p2p platforms is increasing continuously. You must do research and find the best p2p platform to take a loan at a competitive rate.