Peer to Peer Lending – Should Try It or Not?
Peer to Peer lending has become a rage in the UK. Of late, there have been tens of thousands of borrowers that choose this method. It is a simple method when one person who has money to lend gives money to another person who wants to borrow money. This way, it forms a peer-to-peer lending method. It does not involve any financial institution like banks and so, things become very simple.
All one has to do is lend money, charge a rate of interest and mutually decide the time frame after which the borrower will return money to the lender. P2P lending sites like Zopa and Funding Circle act as administrators for people to locate lenders as well as borrowers. As there are no banks or financial institutions involved, it is expected to get a loan at lower interest.
These sites are highly popular amongst savers and lenders. However, the missing part is the protection one gets in the event of a disaster or financial failure. Still there are many provisions to safeguard the money. The sites do credit-check of the borrower and offer risk rating, which suggests the rate at which they can borrow money. Also, if a lender fails to recover money then the website takes charge and acts on the behalf of the lender.
Peer to Peer lending sites – benefits and drawbacks:
There are many small and big sites offering P2P lending and thus you have plenty of options to choose from, whether it’s about borrowing or lending. Examples of big sites are Zopa, Ratesetter and Funding Circle while those of small sites are ThinCats, MarketInvest and LendInvest.
They are a good market place for comparing lenders and their loan rates. Also, good option if you want to lend money as they allow you to do so at a headline-beating rate.
It acts as a safe place for saving. Your money would not be taken because the site takes responsibility of it.
As a borrower, you can get the best of loans without worrying about losing cash. Just follow the method of repayment and you are done. Setting up a direct debit will also do wonders.
Each has its own peculiar methodology of operation. One needs to follow it whether one likes it or not.
As they act like middlemen and also perform administrative duty, they charge a fee for it. So, you need to invest a bit in that.
You may need to put away the money for a long time. It works best when you put away money for a period of one, two or few more years.
Security is a question if these sites go bust especially with the smaller lenders. There are chances that you may lose your cash.
Peer to Peer lending is an easy to follow lending and borrowing method. One must be alert and active with money and things would be set. To know which sites are most suitable for you, just check freepricecompare.com or call us on 02034757476.