What is «Peer-to-Peer Lending»?




Credit: Personal Loan in Switzerland


Definition and Lexicon

Peer-to-peer (P2P) lending describes a growing trend in the UK and the US and sees cash-rich investors bypass banks and lend directly to borrowers, often through online peer-to-peer lending platforms. Both the investor and the borrower benefits as the lender achieves higher interest rates and the borrower lower interest rates than would be on offer if either had gone through a bank. Although some peer-to-peer platforms have developed funds to compensate lenders in the event of a borrower default, lenders are still at more risk because loans are generally unsecured.
     - Financial Times

The advantage to the lenders is that the loans generate income in the form of interest, which can often exceed the amount interest that can be earned by traditional means (such as from saving accounts and CDs). Plus P2P loans give borrowers access to financing that they may not have otherwise gotten approval for by standard financial intermediaries. The method is not without its disadvantages as the lender has very little assurance that the borrower, who traditional financial intermediaries may have rejected due to a high likelihood of defaults, will repay their loan. Furthermore, depending on the lending system employed, in order to compensate lenders for the risk that they are taking, the amount of interest charged for peer to peer loans may be higher than traditional prime loans.
     - Investopedia

Reasons Why a P2P Loan is the Future


Synonym

Crowdlending, P2PL, Social Lending Synonymity: Crowdfunding, Crowdlending, P2P, P2P Finance, P2P Lenders, P2P Lending, peer-to-peer banking, peer-to-peer lending

German: Peer-to-Peer-Kredit, Peer-to-Peer-Darlehen, Kredite von Privat, Kredite von Privat an Privat, Privatkredit, P2P Kredit


Four types of Crowdfunding

                                                         Crowdfunding
             ___________________________________________________|_________________________________________
            |                               |                             |                               |
Lending-Based Crowdfunding      Reward-Based Crowdfunding      Equity-Based Crowdfunding       Donation-Based Crowdfunding



P2P Platforms / sites / Marketplace Lenders

United States of America (USA)

Great Britain/United Kingdom UK

Germany

more in Europe


Peer-to-Peer lending sites for investors