Peer to Peer borrowing: What you need to know

Peer-to-peer lending is a relatively straightforward concept. It’s similar to other types of lending, but instead of borrowing money from a bank or building society, this comes from individual investors. Some of the remaining providers include Assetz Capital, and MarketFinance, for example.

You request a loan, and this may be provided by an individual willing to lend you the money in return for interest. Lenders are matched directly with borrowers through the P2P website, also known as a platform. Interest rates can be competitive if you have a squeaky clean credit history, but this isn’t necessarily always the case, and there will be arrangement fees to pay, so factor these in when applying for a loan. For this reason peer-to-peer platforms will often only offer to provide loans to those with strong credit ratings as they pose the lowest risk of defaulting on their loans.

If you are interested in lending money through P2P lenders, in return for interest, have a look at our article Peer-to-peer lending – is it a good investment?

You can usually borrow anything from £1,000 to £35,000 over a period of between one to five years with interest rates between 3% and 29%. However, it’s important to check what rates are available elsewhere, as personal loan rates are currently particularly low.

There are fees to both lenders and borrowers for the administration and management of the loans, so check these carefully.

Author: wpadmin

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