Advertisements
How Peer To Peer Lending Can Change The World
Advertisements

If you do not want to go through the traditional route of borrowing money from banks you can consider Peer To Peer Lending UK. It is relatively a new way of lending but it offers many benefits to the borrowers and investors. That is why it has become very popular in a short time. However, if you are thinking of borrowing through p2p lending it is essential to understand what you are committing to and what are the potential risks and benefits involved in it. Although p2p platforms allow you to borrow money without involving any bank or financial institution, some restrictions might be even tighter than those of banks. Another significant draw is often the competitive interest rates so you must compare available loan options before making a decision. 

Advertisements

In this guide we are providing all the necessary information about p2p loans so that you can make a better decision.

What Are P2p Loans?

Peer to peer loan is similar to any other unsecured personal loans but the only difference is that you are not borrowing money from a bank instead you are taking loan from an individual or group of individuals. P2p platforms act as matchmakers which pair up people who want to invest in loans with the potential borrowers. These platforms set an interest rate that is favorable for both the investors and borrowers. Individuals with low credit scores have to pay high interest rates because they carry more risk as compared to borrowers with high credit scores. It means that like traditional lending the interest rate depends on your credit rating.

How To Borrow Money Through P2p Platforms?

How To Borrow Money Through P2p Platforms?

All the peer to peer lending platforms operate online. So the borrowers do not need to go to the lender’s branches and make applications in person. You just need to choose the right platform and make an online application. You have to provide all the necessary information such as how much you want to borrow and for how long, your credit score and financial history. The eligibility criteria may vary from p2p platform but you must be of 18 years or above, show your income proof to the lender and must have been a resident of the UK to take out a loan.  

P2p Platforms offer a wide variety of loans that include personal loans, business loans and property loans. You can take out a loan for a number of reasons such as paying utility bills, car repair, renovation of home or  resolving business cash flow issues. 

Are P2p Loans A Good Idea?

Are P2p Loans A Good Idea?
Advertisements

The most significant benefit of p2p loans is that you can get loans at an interest rate that is lower than the loans that you take from banks or other lenders. It is because that p2p platforms operate online which help lenders to minimise operating cost and this can be passed to a borrower in the form of low annual percentage (APR). Many p2p platforms in the UK also offer flexibility in loan repayments and even do not charge any early repayment fees. On the other hand, banks and traditional lending institutions have strict lending criteria according to which the interest rate is set. 

When you are borrowing through p2p platforms you must be prepared and comfortable in borrowing in a digital environment. You must check the terms and conditions before taking out a loan to avoidant inconvenience. There are many p2p platforms in the UK you must shop around and make price comparisons so that you can choose a loan at a competitive rate. 

Can You Get A P2p Loan With Bad Credit?  

Can You Get A P2p Loan With Bad Credit?  

Peer to peer loans are the best way to take out loans for those who find it challenging to get traditional bank loans due to bad credit. You can get a loan even if you have a bad credit score but you should remember that you have to pay a high interest rate. Getting a loan with bad credit might not be an easy option and some platforms have strict criteria compared to traditional banks. All the p2p platforms check the creditworthiness of the borrowers according to which a risk level is assigned to them. The more the risk a  borrower has the more will be the interest rate. If you want to get a loan at a cheap rate you must improve your credit score. 

Is It Safe To Take Out P2p Loans?

Is It Safe To Take Out P2p Loans?

The most significant drawback of p2p loans is for the investors not the borrowers. The amount they invest in p2p loans is not protected by the Financial Services Compensation Scheme (FSCS) and they can lose all their money in case of borrowers default. As a borrower you do not need to worry about it but you must check terms and conditions carefully before taking a loan. 

If you don’t repay on time it can affect your credit profile and also you have to pay late repayment charges. Moreover, if you default on a p2p loan, the company may pass the loan to a debt collection agency and as a result you may have to go to court. 

The terms and interest rate of the loans varies from lender to lender so it is essential to do research, choose a reputable Bridging Loan platform and make price comparisons to find a loan at a competitive rate. You can also use an online comparison site to get a quick comparison without wasting your time and energy.  

By Author

Leave a Reply

Your email address will not be published.