What comes to your mind when you hear C2C? Platforms like Facebook marketplace etc wherein customers can offer items they have for selling. These items are cheaper as they are free of middlemen. Peer to peer (P2P) lending is the same concept. It is a platform which matches borrowers with lenders. In other words, if I have some extra money which I want to lend and there is a borrower who needs money, then we can make a deal and exchange funds. You might think what the benefit is of cracking these deals as banks and lending institutions are a medium to borrow money. Below are the benefits listed for both borrowers and lenders:
Cheaper and hassle free: For borrowers, P2P allows easy and cheap access to money and for lenders, it offers hassle free platform to earn interest and lend money for short periods. It is because the money is free of overhead costs involved in lending otherwise. There is no collateral or security, it is just a mode of unsecured short-term borrowing from a peer. In other words, if company A has excessive funds, it can lend to company B to meet its short-term requirement.
Mutually beneficial: The lenders are other than banks or financial institutions. The lenders are companies which have excessive funds at the end of the day which it wants to lend at impressive rate of return. This means it opens opportunity for all those lenders who have excessive funds available for lending. They offer funds at a rate which is lower than lending rate in the market and higher than standard rate of interest that they can receive on keeping their money in banks. Thus, P2P serves as mutually beneficial for both borrowers and lenders.
Aid to the economy: It helps in balancing the economy as demand of funds matches the supply. The interest rate can be decided by lender or by the intermediary P2P platform based on demand and supply. The rates never shoot up haphazardly because of availability of funds for lending.
A platform for all: Students, companies, charitable organizations and entrepreneurs too can utilise this platform for borrowing and lending. The platform helps in matching peers from same sector as the quantum of funds availability and requirement of funds can match only if narrower and lender share common sector.
Easy and quick process of funds: P2P platforms are online for processing payments and receipts quickly. There are many P2P lending groups that are operated online which offer various features, risk-free platform and transparency of deals.
All P2P platforms charge certain fees from borrowers and lenders for providing their services. It is important that you look for a reliable platform which can offer some security on authenticity of both borrowers and lenders and filter out unqualified dealers. You don’t want to lend money to anyone or borrow from anyone. You want the platform to do some sanity checks/ verification of the users registered and hence, it is significant to deal through a reliable platform.

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