Peer To Peer Lending
Peer-to-peer (P2P) lending enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman. Websites that facilitate peer-to-peer lending have greatly increased its adoption as an alternative method of financing.
P2P lending is also known as social lending or crowdlending. It has only existed since 2005, but the crowd of competitors already includes Prosper, Lending Club, Peerform, Upstart, and StreetShares.
- P2P lending websites connect borrowers directly to investors. The site sets the rates and terms and enables the transaction.
- P2P lenders are individual investors who want to get a better return on their cash savings than a bank savings account or CD offers.
- P2P borrowers seek an alternative to traditional banks or a better rate than banks offer.
Any consumer or investor considering using a peer-to-peer lending site should check the fees on transactions.
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