As the definition indicates, it's an alternate kind of financing in which folks contribute to individuals. This practice was happening since time immemorial, however, the expression has gained popularity because of the entrance of several platforms mainly on the internet that facilitates such financing between individuals.
In the past few decades, there's been a spike in new peer to peer loan firms around the world that provides the best solutions for investing in this type of loan so that they are beneficial for you.
Different platforms are available for this type of lending which underlines the demand for this kind of charge around the world.
A P2P lending trade would entail a willing lender along with a ready loan seeker (the debtor ) who agree on particular conditions.
A loan seeker might have many motives to avail of a P2P loan as opposed to a conventional loan. These include:
- Flexibility in determining prices, durations, little loan amounts
- Lack of rigorous norms and paperwork
- Quick execution in the event of emergency requirements
A creditor would mostly consider P2P financing for two fundamental motives:
- Alternative investment
Prior to the arrival of those P2P platforms, folks would take short-term interest-free loans from folks that have been directly or indirectly understood to them. This situation had its limits to both loan seekers and for creditors
These are the issues that online P2P platforms have managed to fix. Additionally, P2P platforms have managed to scale this up to practice by allowing transactions between two people.