Peer-to-peer lending is one of the most famous investment options for UK residents. Peer to peer lending, often known as P2P or social lending, lets people borrow and loan money to each other instantly. This is one of the most accessible ways to invest because there is no need for a middleman in this sort of loan.
As a result, buyers and sellers can meet each other and make transactions without any problem. The most excellent aspect of peer-to-peer lending is that, in addition to eliminating intermediaries, it also removes the meddling of financial institutions in lending or borrowing money. But wait, there’s more to it than that! P2P lending has numerous other benefits, as we will see in the coming sections.
You can benefit from higher returns if you are an investor
Compared to other investment options in the UK, such as stocks, mutual funds, or any other kind of investment, P2P lending clearly gives superior returns to investors. Individuals who lend their money to others benefit from higher rates of return.
When compared to bank rates, these returns can be several times higher. On the other hand, if you believe that the benefits are only available to the lender, you are mistaken! Individuals who borrow money through P2P have identical financial benefits as those who loan from banks.
Allows the lenders and borrowers to know each other
When you lend money to someone or invest in a business, you certainly want to know where your money is going. This is where peer-to-peer lending can help. Several investors want to know who they’re giving loans to, why they need the money, and where it’s going.
This provides the lenders with a feeling of completion. Lenders might also select borrowers who they believe will be able to repay the money on schedule and in full.
This is a convenient form of funding
P2P lending might be a great alternative to taking out bank loans, particularly for borrowers. This is due to the borrower’s poor credit history. P2P lending also provides a real feeling of togetherness, with communities that are usually busy and individuals who are always willing to discuss their lending and borrowing experiences.
P2P has less rate of interest
P2P loans, for example, typically have cheaper interest rates. This is due to increased lender rivalry and decreased fees involved. P2P lenders, on the other hand, are also likely to lend in a helpful manner. If a borrower has a questionable income statement but desperately needs money, a lender may be ready to sacrifice a higher yield to finance the loan.
It is a good option for people who don’t want to visit banks
P2P lending is the most secure alternative, especially for people who do not want to switch from one bank to another, searching for the most excellent deal. Some people simply despise banks and will go to any length to avoid doing business with them. This is where peer-to-peer lending can help these people.