In need of money, but tired of the bureaucracy? There are options out there that can your life easier. One such option is P2P lending. Pear-to-Pear lending is the process in which individuals can obtain a loan from other people, eliminating the requirement of financial organizations out completely.
How Does It Work?
A P2P website has a list of individuals who invest in their network. These are called loan aggregators. These investors are then connected with the people in need of a loan for personal or property needs. Loan aggregators like Mintos review these applicants and match them to the right investors.
How does an investor benefit?
These loans, just like in the case of a bank loan are not free of interest. Based on the amount of the investment and the tenure, an investor can get up to 11% interest on their amounts. In this process, they do not pay the loan aggregators anything additionally. A P2P website such a Mentos, Upstart, Lending Club, etc. makes their income from the existing interests they collect from the individuals taking a loan.
Why a P2P platform?
There are many reasons for this:
- The options for loan seeks are many. A bank will only able to stick to its standard guidelines. This does not allow them to give varying loan amounts and flexible interest rates.
- Safety. These aggregators such as Mintos review the candidates run background checks and keep a file of all their details.
- Short Period turnover. This means, your money is not held-up for long periods and you can rotate your capital effectively. This also gives an investor a good chance to earn high interest in smaller periods.
When it comes to P2P aggregators, the risks are a few. The first obvious one is the company closing down altogether from mismanagement. It is always a good idea to research on these P2P websites before you invest in them. The highest business risk here is always that of the aggregator itself. If too many loan seekers fail to clear the debt on time, the platform is sure to suffer a high burden.
If you are a loan seeker facing damages of a bank, then this is a good option for you. If you are an investor, these platforms are the perfect investment shot-term portfolios. You can be sure to receive higher amounts without its dependence on the news or the stock market.