The Advantages of Peer to Peer Lending for the Borrower and Investor

Peer to peer lending works a lot like how it sounds. It is essentially a group of people working together to lend and borrow money among each other. This is facilitated by a peer to peer lending company. The transactions take place exclusively online. There are some great advantages for both the lender and the borrower.

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One of the major advantages for a borrower in this kind of framework is the low interest rates. On average, borrowers get 5 percent lower interest rates than they on their credit cards. This can translate to thousands of dollars in savings over time.

Borrowers also enjoy fixed interest rates. Unlike credit card companies, most peer to peer marketplaces do not raise interest rates for loans even with late payments. This is advantageous for the borrower and can increase the chances of repaying the loan on time.

The loan application process is also fast and easy. With peer to peer investing, all you need to do is fill out your information and validate your identity. The money is also transferred immediately once the loan is approved. The best part is that all this can be done online.

There are also advantages of investing in peer to peer loans. The marketplace allows for good returns, sometimes of up to nine percent which is pretty high for a passive investment.

Peer to peer market places are also easy to invest in. The basic principles and frameworks are easy to understand. This is a passive investment opportunity meaning that cash flow goes directly to your account as borrowers repay their loans. Many companies have automated systems where cash flow can be reinvested into new pre-approved loans.

For people interested in peer to peer real estate, the model works very similar to trust deed investing. Potential investors can get into the commercial real estate market with little investment. Peer to peer market places are helping people with shared interests find ways to help each other in ways that are mutually beneficial. This trend is only set to rise in the coming years.

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