In today’s world, where everyone is looking to start a business of their own and even have a great idea for the same in their mind, the biggest barrier is to have the money to start it. One only starts pouring in money into a business or an idea when they see it working, but to show it working one has to start off somewhere. Earlier, it was possible to take a loan from a bank or use credit card, but it is not much feasible in today’s world because of the reason that the interest rate of almost all the banks is so high that it is practically impossible for a person to take a risk of such high stature and in addition to that, banks provide loans only if the person is able to show that they have something of the similar value which can be taken by the bank if the person is not able to pay the money along with the interest in the required time.
Why peer-to-peer lending?
Because of such a difficult situation, a new type of loans started known as peer-to-peer lending. As the name suggests, it is a kind of lending which is provided by one individual to another at a fixed rate of interest decided by both the parties which are obviously less than the one imposed by the banks otherwise there is no point in it.
Some of the major advantages of peer-to-peer lending are: –
Lower interest rates as compared to the banks
One of the main reasons why P2P lending came into existence was to tackle the problem imposed by the bank in the form of interest rate which was pretty high after the recession period. This made it very difficult for the common people to get a loan from the bank, which will be sufficient enough for them to start a business and to repay the amount with interest. The individuals can decide the rate among themselves or many companies and websites like icash.ca are also there that does the P2P lending.
People may get a loan despite their past record and low credit score
Credit score these days is of a lot of importance as it is a direct measure of your capability to pay back the loan you take and takes your past records into consideration as well. A low credit score means it will be almost impossible for the person to get a loan from the bank. But with peer-to-peer lending, it is possible for them to get a loan, but usually at a higher interest because it involves risk.
These were some of the advantages of the P2P lending that are there. One can read more about it on a different website and get a better insight into them. It is also important for the person to make sure that they read all the documents and rules clearly before finalizing anything so that they aren’t in any trouble in the future.