Peer to peer loan lenders bypass bank middlemen

Bank Lobby

People can bypass the bank completely with a peer to peer loan lender. Image from Wikimedia Commons.

Someone who needs to get a loan but doesn’t want to go to a bank can look into peer to peer loan lenders. With peer to peer lending, people who want to borrow money are put in touch with people who have capital. It is becoming a booming business.

Peer to peer loan lenders cut out the middleman

Those looking to get a personal loan for whatever reason — be it for home improvement or for debt consolidation — don’t always have to go to traditional loan lenders like banks. There’s a new service called peer to peer lending that become popular in the last few years. Peer to peer lending is fairly simple. A person interested in borrowing money goes to a website and applies to get a loan. If the service accepts the consumer, then the person who applied may get offered a loan by any party that has money to lend. Then the consumer can decide to accept or decline the loan that’s offered. The funding comes from investors, which is how a lot of banks get lending capital. It also has returns for investors equal to or better than the stock market, according to Forbes.

Services differ

There are numerous peer to peer lending services, and there can be differing manners in which the loan is offered. For instance, investors can pledge money together in a loan bundle. On the peer to peer service Prosper, lenders or investors can make competing offers to loa consumers. Interest rates and terms can vary, so it isn’t people will get loan offers they want.

That does not mean easy money

Most of these services are as discerning as banks and won’t accept a consumer with a credit score in the tank. However, interest rates can often be a lot lower than an installment loan from mainstream financial institution like a bank or finance company.



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