Peer to Peer lending has seen rapid growth over time. The P2P platforms are increasing the loan types they offer to their clients. Today, these websites are offering loans that were only offered by conventional banks in the past. We are discussing the top three types of P2P loans in this post. Peer to Peer lending is becoming accessible to the public at a fast pace. Borrowers join these networks to get quick access to funds, and the lenders connect with them to earn high returns. Both look forward to a beneficial interest rate that is unavailable at the banks. There is no intermediary involved in facilitating the transactions. The investors and lenders don’t have to pay the broker to complete the lending process. That is why P2P platforms are becoming popular among both parties.
The primary benefit of P2P lending to borrowers is the variety of loan types. The P2P lending platforms provide these loans at easy repayment terms and conditions. The loan amounts are also growing as the industry progresses. Here are primary loan types currently served by the worldwide P2P platforms.
Personal Loans
Personal loans are the typical loans offered by Peer to Peer lending websites. Easy policies are the particular reason why everyone prefers them. In addition, P2P lenders apply lesser restrictions on these loans as compared to the banks.
A soft credit check is one of the aspects that makes P2P lending an attractive solution. Whereas banks focus on lending money to individuals with above-average credit scores, the P2P platforms provide loans to borrowers with average credit ratings.
If you have a high credit score, you can commonly borrow up to £25000 as an unsecured loan with a repayment time ranging from two to five years. The interest rate is between five to six percent. That is less than what you have to pay for the loan taken by a credit card company.
The loan repayment strategy Of Peer to Peer lending platforms differs from banks. P2P websites provide constant-rate loans that can be entirely payable within five years. That facilitates the borrower in repaying much faster. So, P2P lending offers a better repayment process than banks that have varying policies.
Auto Loans
Auto loans are not called auto loans on the Peer to Peer lending networks. The P2P websites consider them as regular loans on the P2P websites. Also, you can take a loan to buy or refinance an automobile.
For instance, some P2P lenders can lend you up to £25000 for a car loan that you can use to either purchase or refinance an automobile.
Although interest rates on auto loans are higher than the car loan you receive from banks, you do not need to use your car as collateral like securing a loan from a bank. There can be an amazing benefit of that as well. You can drive your car around while paying its installments. Moreover, you can travel to your office or utilize it for business purposes. P2P lenders give you a better option because you can stay debt-free while paying for the car. Since the interest does not add up like banks.
Business Loans
Peer to Peer investors is also serving the business loans sector. That is great news too. Plenty of banks offer business loans. But the borrowers have a difficult time getting them. Since they require vast amounts of paperwork and the number of loans they grant is lower than they claim.
P2P lenders are just as beneficial to business borrowers as they are to any other borrower type. These benefits include low-interest rates, an easy-to-apply system, a fast loan-granting process, and loan provision even at an average credit score. Nowadays, you can receive a business loan from the P2P lending network that you cannot obtain from the banks.
Conclusion
The P2P lending industry is growing at a fast pace. With the development of P2P lending websites, the technology is starting to serve numerous borrower types, ranging from personal and car loan borrowers to business loan borrowers. Moreover, the P2P lenders provide loans at reasonable terms and conditions as compared to the banks. They are lenient when it comes to the risk assessment of borrowers. So it seems like Peer to Peer lending has a promising future.
