If you need to borrow money, among the choices you have is going to a bank or using a credit card. In recent years, peer-to-peer (P2P) lending platform has gained popularity among those in need of a loan. This is because of the high interest rate banks charge on their loans which may not be feasible for many borrowers. The following are the advantages P2P platform have over banks.
What is P2P Lending?
A peer-to-peer loan matches up individuals or businesses on one side and on the other someone who’s willing to loan out some of their own personal money. The entire transaction is done online and therefore cuts out expensive fees from a middleman and passes on those savings and rates to the consumer making a much more attractive proposition than borrowing from a bank. Peer-to-peer lenders do not operate on the high street and that’s another way that they keep their overheads down instead they work online much like an online marketplace.
Advantages of Lending Clubs
1. Custom Made Offers
Are you thinking of giving home a modern makeover? Or you need money to buy your dream car? A P2P loan facility is as convenient as a personal loan but cheaper than a credit card. Also, P2P lending platforms have custom made offers to suit your various needs.
2. Loans for Every Need
Unlike a bank, P2P platforms offer applicant’s unsecured loans for any occasion. This loan can be used for repaying debts to planning your wedding or funding your next vacation. You can choose the interest rate, loan amount, and the tenure that best suits you the best. Small loans below $1000 are available on P2P lending platforms. Check here.
3. Shorter Repayment Term
The biggest pull for borrowers to P2P is the shorter repayment time. The loans have a duration of 3 to 36 months while personal loans from banks have a duration of 1 to 5 years.
4. No Repayment Charge
Banks charge a fee of 2 to 4% on early closure of a personal loan but with P2P platforms you can repay the entire loan after 3 months without paying any penalty. However, some banks allow part payment of loans P2Ps does not offer this facility.
5. Faster Turnaround Time
P2P loan has a fast disbursal time that is faster than traditional banks. The disbursal process may take around 24 to 48 hours after the verification of the borrower while a bank loan usually takes 5 to 7 days to reach the customer.
6. More Flexibility
Banks operate on a branch model and it is not feasible for them to give small ticket loans. P2P loans have more flexibility than banks loans. Loan for a higher amount on P2P despite a credit score below 750 is possible if the lender is satisfied after the risk assessment. An applicant is evaluated on the basis of ability, stability, and intentions to repay. This is assessed on bank statements and salary slips.
7. More Lenders
First-time borrowers’ face a tough time getting access to a bank loan