Traditionally, we all know that the bridge between lenders and borrowers is banks. The borrowers need to stand in a long queue, boggle their minds in endless paperwork, provide proofs, financial history, credit ratings and high valued mortgage. They need to run races to and fro and then wait for eternity for their loan to pass.
Banks provide loans to borrowers at high interest rates and provide depositors or lenders with a decent interest on their deposits. The difference between loan and deposit interest is called spread which is known as Net Interest Margin and is the profit for banks.
There could have been no thought of replacing Banks’ system with a new, hassle-free system which can connect lenders and borrowers, list the lender’s financial profile, and sanction the loan in a time and space that none of us could have imagined.
The advent of technology has been changing human consumption patterns and with its omnipresence, it has made their lives easier!
Introducing one such financial product Peer To Peer Lending which is a platform connecting lender to borrower.
Independent of financial institutions, this platform does not involve paperwork, numerous steps, or a long process.
The borrower has to enter his details regarding his financial history, credit ratings and financial profile based on which he is assigned a risk category.
On the other hand, people who want to provide loans visit the platform, enter their required details and offer a minimum stated loan. This is in return for fixed interest. Most of the peer-to-peer platforms offer the feature of lock-in and any-time withdrawal benefit to investors for flexible entry and exit.
This crowdfunding platform is a boon to startups, MSMEs and small businesses who otherwise have to face bank bureaucracy and red tape associated with law and paperwork. This user-friendly platform has provided financial encouragement to these businesses and helped them soar off the charts.
P2P alleviates borrowers’ 3 pain points:
• Availability: Flexible financing options.
• Accessibility: User friendly and easy to use platform supported by customer care guidance.
•Affordability: Debt consumption at lower rate by avoiding extensive overheads taken into account by banks.
As with banks, the P2P lender provides personal, auto and home loans.
This web-based platform has changed the trajectory of loan transactions and is in the hustle pipeline of streamlining the debt industry. It brings symmetrical improvement in the credit cycle, debt market and loan exchange!
Witness the transformation of lending and borrowing through technology’s lens with Peer-to-Peer Lending. As the world embraces this progressive approach, it’s vital to explore various avenues for investment, including fixed income options, which can provide a stable financial journey.
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Disclaimer: The content provided above is for educational purposes only and should not be considered as financial advice. Investment decisions should be made after careful consideration of individual financial circumstances and consultation with professional advisors.