The popularity of P2P lending quickly spread once people began to realize the advantages it has over traditional hard money lenders. One of the advantages for borrowers is having direct access to a large pool of capital without having to go through an institutional investor, or find a private source of funding.
Alternative lenders are able to approve loans with less red tape, restrictions, and guidelines than traditional lenders. The lack of over-regulation allows the loan process to move forward with a higher sense of urgency and in a more streamlined process. The savings in overhead for an alternative lender translate into highly competitive interest rates compared to their counterparts.
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- Peer-to-peer lending platforms have succeeded at building a marketplace that promotes complete transparency of their offerings. Investors can evaluate the wealth of information on each loan and perform their own due diligence before investing a penny of their money.
- The high returns on investment are of course a huge draw to P2P lending, but that's not everything. One of the reasons that peer-to-peer lending is so attractive to the everyday investor is that P2P lending gives people opportunities to invest in a cause or idea that they find worthy of their time and money.
- Peer-to-peer investors are easily able to earn higher returns than they would from a bank savings account, and they also enjoy less volatility than playing the stock market.