Peer to Peer Lending (Person to Person Loans)
Peer to Peer Loans or Person to Person Lending is a method for both investors and borrowers to access a debt market with less hassle and faster turn around for investment and borrowings.
The way it works is that investors pool their money together to invest in an individual who has a particular loan and repayment history profile. If the pool of investor peers think they can make money investing in a borrower they commit money to the loan request. Once the total loan requested is achieved, the borrower receives the money and the lenders pay the money. The peer to peer lending process is as follows:
- Borrowers choose a loan amount up to a certain amount depending on the peer to peer lending site, desired APR (annual percentage rate (can vary from 5 to 25% APR), purpose of the loan and post a loan listing.
- Peer Investors review loan listings and invest in listings that meet their criteria.
- Once the process is complete, borrowers make fixed monthly payments and investors receive a portion of those payments directly to their accounts managed by the peer lending company.
Increase Your Chances to Get a Person to Person Loan
Peer to Peer Loan Guide