How Peer To Peer Lending Platform Differs From a Bank?

Borrowing Money Through P2P Sites

No matter how less interest a financial agency promises, but if its formalities are too time taking, the person in a hurry is obviously not going to consider it. On the other hand, if there is enough time in the hand of the borrower, he would love to look for a platform that delivers him money at the minimum interest rate. Also, borrowing money through P2P sites offers both the above-mentioned advantages. How? Find it below.

Lending clubs are absolutely authorized:

Lending clubs are getting popular these days. These lending clubs or the peer to peer lending platforms are currently the most preferred options for the borrowers. It is here to mention that these peer to peer lending platforms are absolutely authentic.

These are authorized by the RBI; hence leave no doubt regarding the safety of the investor's money, neither of the borrowers. Being a borrower, you are not going to be involved with any sort of legal complications.

Moreover, each of the lender's profile in lending club is listed only after being passed through the strict verification process. Each candidate (lender) is verified both digitally and personally. In fact, one can check every detail of the lender through the concerned P2P site.

How do they vary from the banks?

The P2P platforms are absolutely advantageous for both lenders and borrowers, in terms of money. More importantly, both lending and borrowing are advantageous here than the banks. How can it be beneficial for a borrower, and at the same time for a lender?

This is so, unlike banks, these lending platforms don't have their own profit from the lender/investor's money. What normally happens in the case of the banking investments is that people here deposit certain money for a particular time period. The same money is given by the bank to a borrower, demanding certain interest rate. The bank then keeps its own percentage and delivers the rest as the interest amount to the lender. However, one doesn't have to compromise any of his money, if he wants to lend money online through P2P platform.

Now, this might sound more advantageous for the lenders than the borrowers; but, it is equally profitable for the borrower as well.

How can be it valuable for the borrowers?

As explained above, it has been fulfilling for the borrower as it has been designed to fulfill those who want quick money, as well as those who want money at least interest rate. It happens so because the number of lenders here is too big. You don't need to fill-up huge number of forms, neither are there so many formalities to go through.

As the investors/lenders are always ready to pay the amount that any borrower needs, you can have the amount if the interest rate the lender asks is not too big. As there are so many lenders over these platforms, a borrower gets multiple options for the people willing to lend money online. Hence, he can go with the one who can pay him more money within the minimal time frame, at minimal interest rate.

All these above-mentioned features can't be benefitted through banks. First of all, the banks make too much of delays. More than that, the amount of loan is pretty much fixed. For the greater amount of loans, one has to pay higher interest rates.

Sujit Kayastha is a peer to peer lending financial expert. The writer has a flair for writing and he keeps on writing various articles and blogs related to the industry.