Most people who are interested in a loan, take advantage of the offers of the banks. But for some years, another alternative has become more and more accepted: credit from person to person. What is behind it, will be explained below.
The credit from person to person
This form of lending is different. It is not the banks that grant a loan, but private individuals who have joined forces to form a network. Meanwhile there are some such providers, but the pioneer of this idea was lenders. This is where investors meet in a marketplace on the Internet. Your goal is to make as much profit as possible. The offers of the banks are not particularly attractive.
The members make their money available to lend to other people. Unlike the banks, the borrower determines the interest rate. Members only have to accept it. Then there is a loan agreement. The advantage of this investment is that the returns are higher than with money market accounts or time deposit accounts. As a rule, the loan seekers offer a higher interest rate than banks demand it.
What is the positive for the borrower?
The borrower has the opportunity to obtain a loan through a person-to-person loan, even if the banks have already declined. But often customers turn to lenders because they do not want credit from their bank. However, the creditworthiness of lenders must also be in order.
The minimum deposit for the investors is 250, – Euro. The loan seeker introduces his project. Now, each member can indicate what their share of the loan should be. It is not the case with lenders that the money comes from one member only. Each member can provide a certain amount. This runs until the loan amount has been reached in full.
The wishes of the loan seekers are different and also differ in the amount of the loan. Some just want to make smaller purchases or balance their checking account. Others want to pay tax debts. Anyone looking at lenders quickly realizes that some bidders sometimes offer 10 percent interest just to get a loan at all.
The basic idea of granting credit from person to person is not bad.
Especially since the money of investors is protected by a fund. In addition, lenders makes a prognosis in percent for each request, how high a failure is to be expected.