The loan industry is one of the biggest in a country and you might have witnessed a lot of loan models and also for various purposes. These products may be different in its purposes and their rates but are all similar in its working and the funding method. Peer to peer lending is a unique system of providing loans where a common platform is shared by both the people who need money and those who have excess money for their disposal. Agents like Prosper and Zopa are these mediators who facilitate a platform for people who need and have money to communicate and it has gained popularity since the system’s forming. Peer to peer Lending has proven to be a win- win situation for both the parties involving in a loan contract. The system is of a flexible nature as the participants can search for better options in the platform which they think would suit their needs of repayments.
Peer to Peer lending is gaining momentum with its innovative system which works on the interest of both the parties involved. Some of the highlights of peer to peer lending include its flexibility of selecting the most suited bid for the loan amount and the interest asked by the lender. This system only asks for a limited of steps for applying for a loan unlike regular applications for loans, also here the mediator will access the credit status of the participants and list them accordingly for the benefiting the lenders to know their risks when forwarding a loan. It is also helpful for the borrowers as people with comparatively lesser credit scores can access and avail a loan as the policies are flexible as you have a lot of options to select.
Peer to peer lending also have its share of disadvantages as it would contain borrowers who are rejected by other loan providers and this can be only ensured by the trustworthiness of the mediator platform and their screening process. The interest rate as against the claims can be high compared to the traditional loans and caution should be maintained when selecting the right person.
With the above said pros and cons peer to peer lending is catching up in its popularity as an emerging mean of loan availing. Peer to peer lending is a fast growing industry in US as more and more people and big players are making their way into this field.