Is Peer To Peer Lending The Right Solution For You?
People that are feeling financially strapped know that there are few options available for debt relief but many do not realize that peer to peer lending may be a viable solution for their problem. Peer to peer lending websites facilitate loans between strangers without using a traditional banking institution for servicing the loan. Individuals that are looking for a loan list their financial details along with the amount they are seeking and why they need the money in a loan profile for potential lenders to peruse. Lenders choose which loans to fund from the profiles presented and earn a steady return from the money invested.
Borrowers like using this option for obtaining a loan because they can generally get lower interest rates than they would be able to obtain using a traditional banking institution or lender. Lenders like investing their money in peer to peer lending because they earn a handsome return on their investment, much more than they would realize placing their money in a savings account or using many traditional investing methods. The company facilitating the loans charges a small percentage of the loan amount as their fee for bringing the borrowers and lenders together.
Many of the borrowers that post loan profiles on peer to peer lending websites have their loans fully funded in less than two weeks. The rates that the borrowers receive on the loans is often much less than those charged for credit cards, so using the loan to pay off credit cards can reduce the monthly payment by a significant amount. Paying off debts will help increase the person’s credit score and make them more creditworthy in the future.
Using peer to peer lending to eliminate banking institutions and credit card companies as the middlemen in lending is quickly becoming a popular option for people frustrated with the high fees and red tape of traditional lending. Today, peer to peer lending companies service hundreds of millions of dollars in loans of $25,000 or less for thousands of individuals all over the world. For some peer to peer lending companies, the loan volume is rising twice as fast this year as it was the previous year.
The popularity of peer to peer lending may be more than just the better interest rates and faster loan funding. These companies depend on social networking to make users feel as if they are part of a group and interacting with their peers. Lenders get the satisfaction of knowing that they are helping ordinary people meet their financial goals and investing directly into the community without giving a slice of the profits to the titans on Wall Street. As peer to peer lending continues to attract attention, the popularity of this funding method will continue to grow.