Peer to peer lending is all the rage. Nevertheless, before blindly jumping on the P2P lending bandwagon, here is what you need to know.
The peer to peer lending industry in the UK is growing in popularity over the past decade to an extent that the UK is considered as the leading countries in peer to peer lending across the globe. The industry has quickly become the biggest sector in the UK ever since 2005, when Zopa was launched. There are over 40 peer to peer lending platforms have been launched in the industry and there are new players emerging in the industry as well.
The P2P lending sector in the United Kingdom also known as the Crowd-lending sector lent about £480m in the year 2013 as per records of P2P Finance Association. Approximately 60% of the total amount given in loans was lent to the retail customers, whereas, about 40% of that total amount went to business borrowers. The P2P lending sector in the UK is expanding rapidly and according to the most recent estimates it could grow to a whooping £12 billion-a-year within the next 10 years.
In order to benefit from P2P lending, you need to take into consideration all facts and some prior knowledge about it. These loans can be one of the best ways to solve your money issues and you would not go broke if you make repayments. So, if you are looking to benefit from these loans, check out these facts:
· These are Authentic Loans
A number of people do not consider peer to peer lending because the process completely excludes banks from the equation. However, these loans are not only legitimate, these are officially regulated by the Securities and Exchange Commission in the UK.
· The Approval and Funding Process
Unlike traditional loans, peer to peer loans work in a different manner. Once the lending service approves your loan, the loan is put on the lending platform and lenders invest in it. Therefore, the funding is done by peers for the loan. There can be as many as 10 to 30 lenders per loan and the number can grow up to 100 lenders per loan. The borrower makes monthly payments for the loan which is then distributed among peers. If the loan doesn’t attract enough investors, it could be rejected by the lending platform, but it happens rarely.
· Quick Funding of Loans
Perhaps the best part about peer to peer lending is that you can apply for it online whenever you are in need of a loan. You can conduct your own research online, and then apply for a loan. The process is simple and easy and literally takes a few minutes. In some cases, P2P lenders ask for income verification, however, this generally depends upon your credit history and your loan amount. It will take about 4 to 5 working days for you to get approval and the funds will be used in your account within the week.
· Lower Interest Rates
Credit analysts acknowledge the fact that peer to peer lending is better than credit cards and people are using P2P lending to get low interest rates and manage their credit card debt. The best part about P2P loans is that you get fixed loan for fixed interest rate, which is easier to manage.