India is a close-knitted place where
everything is celebrated like a family. In the time of need and disparity being
with friends and family helps, since they stand by you even during the worst of
times. Despite their help, taking and giving money can become a dreaded task,
because of the complication that both the parties’ face.
The idea of knocking at bank doors
To avoid complicated situations, many
people end up taking loans in a traditional way which is from the bank. These
loanscome with repayment burden and while it's safe but yet not beneficial.
Here’s to the new idea: peer to peer
lending
What is peer to peer lending?
As the name suggests it’s an easy and
friendly process of taking or giving loans. Each platform providing this loan
is visited by investors who can lend or invest their money to people who want
to borrow, so this is how borrowers and lenders can connect without any third
person interference.
It has been started remove the fear people have when
they think about loans with a better and friendlier process.
What is peer to peer borrowing?
It’s a simple process where an
investor and an individual contact each other to exchange funds; here instead of
saving money investor lends money through online services. From application to
apply, all the necessary procedure for approval and release of funds is all
done online which reduces the hassle of getting into too much paperwork. As a
lender, if you invest your money you get good returns and in this way, you get
to earn a secondary income every month.
The typical feature of borrowing from
this platform
This kind of loan comes with a
low rate of interest, to ensure you get the lowest always compare to different
financial institutions. Due to competition among investors of different
companies, they try to attract borrowers by offering finance at a low rate.
Depending upon the money to be
borrowed you have to pay initiation fee; compared to bank the fees are
usually at the lower side. Then there is a penalty for late or missed payments.
It’s a quick and easy process,
everyone will say that taking a loan is a difficult process and the fear of
acquiring a personal loan still persists. Such P2P platforms are trying to
tackle that fear and each one has created a hassle-free process which caters to
their customer’s needs and builds trust amongst them.
The importance of credit score
P2P lending platforms have a different
way of calculating the credit score which includes aspects from your life, such
as social media activity, your salary, your expenses etc. It doesn't just
depend on your past repayments and thus even a low credit score person who
possesses the capacity to repay can acquire a loan at these platforms.
Why personal loans?
There are variousdifferent types of
loans that the borrowers can choose to get a loan from.However,personal loans
are the most common P2P loans with no collateral involved in the process. They
are flexible as well since it can be used for any purpose. When it comes to
taking a business loan you can take a secured loan as well, as it benefits the
lender as well, in case of any default it can, however, seize your security.
How safe is to borrow with this
funding
Along with safety and trust come along
the need for a simpler and transparent process.
Information revealed by you is
completely secure and confidential. Since there is a lot of competition among
the lenders the interest rate is usually low.
Advantages of borrowing for your
business
With low interest rates and quick
funding, these loans can help in paying for ongoing expenses or for expanding
its dimensions. With a flexible repayment plan, this can help you start your
work without any hassle.
Challenges that you might face
Every lender associated with peer to peer lending checks credit score, if you
have a poor or low score you might not be able to avail one.
Though these loans can get instantly
funded to you and sometimes lenders might not send full amount at one go. There
is a penalty for any kind of default.
