The financial market has changed drastically. Today, anyone can lend a loan and earn profitable interest rates that were previously unavailable for anybody outside of financial institutions. There has been a significant increase in the number of startups around the country in recent years. But is it possible for banks to meet the credit needs of all startups and individuals?
P2P lending solution has proven the most effective here. There are a lot of individuals who need money for home renovation, education, marriage etc. P2P lending, in simple terms, is a type of social lending in which individuals can lend or borrow money. Lenders are free to choose borrowers complying with their terms and conditions. This financing concept is gaining popularity among lenders.
What distinguishes a Peer-to-Peer Lending Platform from others?
The P2P lending model has been transforming the financial industry and revolutionizing the global financial market in recent years by providing new creative modules and loan services. Compared to the old-style practice of borrowing money from banks, which takes a long time to authorize loans, a custom-designed P2P lending platform is the best alternative. We can use P2P lending solution to quickly review our application and process the loan in minimum turnaround time.
While peer-to-peer lenders provide personal loans equally credibly as traditional banks do, they are not the same. This type of lending connects borrowers with reliable potential investors who are willing to lend.
How does the Peer-to-Peer Lending platform work?
Borrowers receive loans from individual investors (lenders) who lend their money at an agreed rate of interest on a peer-to-peer lending platform.
The profiles of borrowers are posted on the P2P lending platform, from which lenders can freely choose the borrowers’ profile and decide whether or not to provide money.
How much may you borrow, and how much can you lend?
The minimum loan amount might range from Rs 500 to Rs 750. The maximum amount per lender is set at Rs 50,00,000 (in total) across all P2P platforms. If the loan amount exceeds Rs 10,00,000, a certificate from a practicing Chartered Accountant verifying a minimum net worth of Rs 50,00,000 is required.
In one-on-one lending, a single lender’s total loan to a single borrower should not exceed Rs 50,000. The P2Ps should get a certificate from the borrower or lender saying that the borrowing and lending limitations have been followed.
Why do people select peer-to-peer lending?
- These loan platforms are less expensive than traditional banks because the service is provided online. As a result, they are able to provide competitive interest rates.
- Lenders are drawn to the opportunity to earn bigger returns than they would in a bank savings account or a term deposit. They can also safeguard themselves by distributing their loans among several debtors.
- Fast disbursals are one of the biggest attractions on P2P platforms, and competitive lending rates all appeal to borrowers. Peer-to-peer lending platforms may be a preferable option for newer enterprises with little credit or cash flow history, as well as those with poor credit scores or odd or inventive loan requests.
What are the advantages of a P2P lending solutions?
Peer-to-peer lending has its own set of benefits.
- Cheap Interest Rates: Compared to banks and credit cards, borrowers might benefit from low-interest rates. Reductions of up to 35% have been observed in some cases.
- Fixed-Rate of Interest: This type of platform gives the borrower the benefit of a fixed rate of interest even if they are late on their payments, making it a profitable alternative in their hands.
- Simple and Quick Application Processing: Customers have given an exclusive digital experience that facilitates a speedy flow of transactions.
- Cheaper Fees: Compared to other forms of payment, the platform charges lower fees. Furthermore, there is no penalty for paying in advance.
- Higher Returns: Depending on the amount of loan, the returns offered to investors are generally higher.
- Diversification: Investors have a wide range of options to choose from when investing their money.
- Direct Communication with the Buyer: The platform allows lenders to communicate directly with borrowers and complete their transactions with them.
P2P lending is a wonderful option if someone needs a small business loan or someone wants to invest their money credibly. But don’t want to deal with the hassle of dealing with banks and independent lenders. Peer-to-peer lending is a different way to receive a business loan. While looking for a peer-to-peer loan to discover the best offer, check with as many lenders as possible.
Borrowers may be eligible for a reduced interest rate if they have a good credit history. Borrowers with bad credit, on the other hand, are also not barred from applying. Compare offers from a variety of lenders to be sure about the fact that borrowing and lending the loan is a win-win situation for both parties.
To summarize, the best peer to peer lending platform like Perfios has a lending paradigm in which borrowers receive loans from a group of people rather than from a bank. This concept has numerous advantages both for borrowers and lenders.