Alternatives to Payday Lending: Peer to Peer Lending
P2P lending, also known as Peer to Peer lending or person-to-person lending, is one of the best alternates to payday loans, government loans and traditional bank loans. Such payment methods do not involve any third party participation, which means the real investor gets in touch with the needy borrower. Both payday loans and P2P lending are hassle-free lending options for borrowers, where the process is swift, which is just what you need during a financial emergency. However, the latter comes with a considerably low rate of interests and a suitable repayment structure. This is one of the reasons, why this form of lending option is getting quite popular in the market today and a lot of people are opting for the same without giving a second thought.
In the initial times, P2P lending concept was used mainly for the entrepreneurs for funding their micro loans in the developing countries for starting businesses. However, today, you will find that the concept is no longer limited to entrepreneurs. Even petty businessmen, housewives and students, who are looking to pursue higher education, are finding a solution in this lending concept.
Banks have to bear more overhead costs for products like payday loans than what a general investor has to do, which is why the former’s interest rates is higher than the latter. In peer to peer lending, banks are kept completely out of the scenario. Thus, you are sure to save a large amount in the form of interest on the borrowed sum, as the rates charged in this case is way lower than that of a bank.
So, now you would want to apply for such form of lending. However, the question is that “Where can you get the application and get the best available offer without being scammed?”
Luckily, there are a number of online domains, which provide a perfect place, where people looking to invest their surplus fund to get a considerable return can meet the ones looking to borrow a particular amount (for taking care of necessary expenses) at an affordable interest rates. Some of the popular sites for peer to peer landing include Prosper and Lending Club.
Prosper is amongst the market leaders in peer to peer lending. They offer returns to the extent of almost 11% to investors, whereas the borrowers can get hassle-free loans with minimum documents or requirements and at rate of interest as low as slightly above 6.5%. Investors, over there, have the option of setting up their investment criteria. Again, borrowers can post a customized loan listing. Your (investors and borrowers) privacy is kept confidential with the organization and safe from fraudulent sources.
Similar to Prosper, Lending Club is also amongst the popular peer to peer lending sites. They have a simple model as follows:
For Borrowers:
- Apply for a Loan
- Get Funded
- Repay Automatically
For Investors:
- Open Account
- Build Portfolio
- Earn Returns and Reinvest
The investors can get returns almost over 12%, whereas borrowers can enjoy their rate of interest to be as low as slightly above 6.5%. Again, similar to all top financial sites, it has a full-proof system set up for protecting your identity from fraudulent borrowers.
With so many options available out there in P2P lending, this proves as a one of great payday loan alternatives if you have a financial emergency. With minimal hassle and considerably low rate of interest, you will find everything going according to your plan.
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