What is Peer to Peer Lending?
January 8, 2008
Have you ever gone to a bank in desperate need and been turned down for a loan? Have you checked into a bank loan and realized that the combination of the loan and the excruciatingly high interest rate will put you further in the poorhouse? Are you tired of the government regulating how you pay back loans, because they seem to control your money coming and going? Then, you may be interested in learning about peer to peer lending.
When a bank turns you down or charges too much interest to justify a loan, you are pretty much stuck without any recourse. Fortunately, some financially savvy businesspeople got together and came up with the novel idea of peer to peer lending. Instead of going to a bank, struggling entrepreneurs, homeowners, people struggling under a mountain of credit debt, and virtually anyone who wants a financial backer to give them a boost, can apply for a peer loan.
Instead of going to a financial institute and repaying one lender, you can now go to a social lending site and ask for the amount of money you need and state the highest interest rate you are willing to pay. Other people that are signed up as lenders review your profile and can loan you a portion of the requested money.
The peer to peer lending sites match up you, the borrower, with one or a group of lenders that are willing to loan you the money at the rate of interest you’re offering to pay. Prospective lenders can review information about your credit and debt and decide whether they’re comfortable making a micro-loan to you. The social lending site facilitates transferring the money that is loaned to the borrower and the handling the payments back to the lenders. In return for offering the loan marketplace and facilitating the loans they charge some type of fee.
Today, the novel idea is really taking hold and is offering many people an alternative to loans from banks and other regulated financial institutions. For several examples, check out the companies listed below:
What are you initial impressions concerning peer to peer lending?
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