Friday, June 3, 2016

Peer-To-Peer Lending (P2P)

Peer-To-Peer Lending (P2P)
A method of debt financing that enables individuals to borrow and lend money - without the use of an official financial institution as an intermediary. Peer-to-peer lending removes the middleman from the process, but it also involves more time, effort and risk than the general brick-and-mortar lending scenarios. This is also known as "social lending".
The advantage to the lenders is that the loans generate income in the form of interest, which can often exceed the amount interest that can be earned by traditional means (such as from saving accounts and CDs). Plus P2P loans give borrower’s access to financing that they may not have otherwise got approval for by standard financial intermediaries.
The method is not without its disadvantages as the lender has very little assurance that the borrower, who traditional financial intermediaries may have rejected due to a high likelihood of defaults, will repay their loan. Furthermore, depending on the lending system employed, in order to compensate lenders for the risk that they are taking, the amount of interest charged for peer to peer loans may be higher than traditional prime loans.
The key differences on P2P lending platforms are:
• The lenders are individuals who are lending their own money.
• These individual lenders look for a certain amount of responsible behaviour from potential loan seekers which means if one has too many cheques bouncing, their chances of getting a loan is very low.
• Articulating your need and being truthful about your repayment capacity is something lenders look for when they look at a borrower listing for giving him a loan.
• Month end balances are a key factor in deciding which borrower to give loan to and lenders place a great emphasis on this as this signifies spending patterns.
• Being accurate about the end use of the loan amount is very important in getting an offer from a lender.
• Vague statements do not inspire confidence in lenders. So if one needs money for education or for an function or to buy something , be specific on the end use of the loan. This will help in building credibility with lenders.
• Finally one has to give as much information as much as possible
Leading P2P lenders online are : www.faircent.com , www.i-lend.in,www.lendbox.in .
Source:

a community loan exchange platform offers P2P lending and personal loan at low interest rates in India. Best investment plans for your money.
FAIRCENT.COM

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