The peer to peer loans have gained wide traction in recent years. This lending setup bypasses the traditional banks. The borrowers deal directly with the individual lenders. There are several online platforms that connect such borrowers with these lenders. The platform takes a commission for providing its services to both parties. The interest rate can be low or high depending on several factors including the credit rating of the loan applicant.
A big advantage of this borrowing option is that even individuals not eligible for loans from traditional lenders can get loans. They have to provide some collateral or prove a regular income. This lending setup has several benefits for the investors who want to give loans. They can earn a bigger return on their investment compared to other investment options. It is a completely online process. Even the loan applicant’s verification is done online, eliminating the need for a physical verification of the applicant and documents.