More and more people are waking up to the benefits of P2P lending over conventional loans. But how does the breakthrough financial system manage to offer such affordable rates?
Slimming down the middle man with a lending platform
P2P lending doesn’t so much cut out the middle man as slim him down substantially! These platforms do charge a fee to facilitate borrowing, but it’s a much smaller one. By being based online and utilizing cutting-edge software lending platforms such as Pave and OnDeck are able to cut out bank overheads, freeing up more money to provide fantastic rates for borrowers and lenders alike. There are usually no early repayment fees – P2P lending is about people and progression over profits. Credit cards are now viewed as one of the least attractive methods of personal borrowing by many, due to their high interest rate – on average 18% – and their minimum payment feature keeping users often trapped in a spiral of debt. By contrast, P2P loans can offer interest rates that are much lower, and are often what helps consolidate and pay off credit card and personal debt. Zopa offers low rate loans from 3.5%. – 7%, depending on your credit rating.
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Streamlining the financial system
Another reason people are choosing the modernized world of crowdfunding sites is that you can receive your loan in just a couple of weeks, while the bank is still fiddling around with paper work. On average it will take just twelve days to get your P2P loan, compared to three months with your bank.
The idea of crowdfunding sites stemmed from the idea to decentralize banking, and turn more everyday people into investors, kick-start fledgling businesses and provide the capital and fair terms to help eradicate personal debt, peer to peer lending was always destined to be popular. But no-one could predict its explosive success. People are ready to embrace the future of finance and are making the move from mainstream lending to be a part of the financial revolution.
Now is a great time to start if you’re new to the world of P2P lending, and looking to choose the right crowdfunding site options. Thanks to CompareLend.com, you can find the lending platform that’s right for you and read up-to-date industry news, as well as advice on how to improve your loan application. Get online and get ready for banking without the banks.