Blockchain p2p lending platform | blockchain firm

Are P2P Lending Platforms Replacing the Traditional Loan Systems? Find Out Yourself!

P2P Lending Platform

  • What It Is
  • How It Works
  • Benefits and the Future

“The progressive technologies and the sharing economy have opened up the doorway for a life-changing function – Alternate Financing. It has two different financial methods: Crowdfunding and P2P Lending.”

What is Peer-to-Peer or P2P Lending?

P2P lending is a method through which lenders lend money to borrowers at a regular interest rate. The entire process is done on a P2P lending platform. P2P is one of the best investment options available in the market. It benefits the investor/lender with higher returns on the capital.

The sudden rise of P2P lending has paved the way for many individuals and businesses to lend money to borrowers hassle-free, therefore, eliminating the involvement of banks or any other intermediaries.

What Led to the Invention of Peer-to-Peer Lending?

Post the Global Financial Crisis, almost all banks began losing their monopoly in the financial market. The primary reason for this loss was a drastic fall in customer trust. And the second reason was even worse ‘limitations levied on credit financing.’

After this dramatic fallout, people around the world started looking for an innovative and safe alternative mode of financing. This led to the development of P2P lending, which grew in strength in a short duration. In P2P lending, individuals lend money instead of investing it.

“P2P Lending seems to favor investors compared to borrowers since it comes with far fewer risks than Equity Investing.”

p2p lending platform

“Similar to a crowdfunding model, there are three parties involved in P2P lending: Lending Platform, Lenders, and Borrowers.”

How P2B Loans differ from P2P Loans?

P2B loans enable any individual to finance businesses. When an enterprise applies for a mortgage on a lending platform, they provide necessary information about their projects, such as the purpose of raising capital, financial-related statements, and funding strategies. The individual who wishes to give a loan can review the business portfolio and select the project they find interesting.

Is P2P Lending the Right Solution for You?

  • Unfortunately, banks levy huge annual interest rates on loans. P2P loans, on the other hand, do not make borrowers spend much on fundraising.
  • P2P lending is a web service that means the application process occurs in a blink of an eye, therefore, making you forget the tedious paper-based process and long queues.
  • P2P lending does not charge penalties if the borrowers want to pay a loan in advance.
  • Unlike bank-based loans, there is also no requirement of any collaterals or such things.
  • With its transparent nature, P2P platforms aid businesses to view how much progress has been made and who has contributed to a project.

Why Choose P2P Lending Over Bank-based Lending

Getting a loan from a bank is a tedious process. Each of us is aware of the traditional lengthy process involved in the loan procedure. Whenever a person approaches the bank for a loan, the bank starts asking for multiple documents, checks the credit score of the person, analyses his previous transactions, and sometimes they even ask for collateral.

“Even when the individual submits all the documents on time, the bank takes nearly a couple weeks to process the application.”

To avoid the long-standing queues and say goodbye to the traditional procedure, P2P lending is the best alternative. With P2P lending, borrowers are connected directly with the investors. The lenders then select the loans requested by the borrowers. The type of loan varies from personal loans to business loans to home loans.

Benefits of Borrowing on a P2P Lending Platform

1. No Additional Charges for Loan Prepayment

  • Usually, when you close a loan taken from a bank early, the bank levies a Pre-closure fee, which is somewhere between 2-4%
  • Whereas, it is not the same with P2P loans. P2P lending platforms do not levy any charges when an applicant Pre-closes the loan.

2. Flexibility

  • P2P loans are more flexible when compared to bank-based loans. If the lender wishes, he/she can process a loan despite the risks involved while it is not the case with bank loans

3. Paperless Procedure

  • P2P loans are usually processed digitally. Only a few lending platforms involve a physical verification at the customer address.
  • If you visit a bank, you have to submit all the documents physically, and some banks ask you to send both physically and digitally.

Benefits of Investing on a P2P Lending Platform

1. No Intermediaries Involved

In P2P lending, the interest rates and the loan amount are decided by the investor and the borrower without anyone interfering.

2. Platform Stability

P2P platforms are safer options, and they come with reduced risks when compared to the risks involved in bank-based lending.

3. Passive Income Source

By lending money to borrowers through a P2P platform, you start generating passive income through the interest levied on the loans.

“In a conventional lending process, people require intermediaries such as loan officials, banks, and loan processors to build trust. Also, the involvement of intermediaries in the loan process leads to high fees.”

How does a Blockchain-Powered P2P Lending Platform work?

Lender Creates an Account

  • The lender creates a profile with his/her necessary details such as Name, ID, Contact Info, Bank Details, the investment type through which the lender wishes to lend funds, interest rates, and the tenure.
  • After filling in the necessary credentials, the lender submits the completed application to the platform.

Loan Requests

  • Before proceeding with further action, the lenders will have to wait until they receive any loan requests from borrowers.
  • When a borrower initiates a loan request on the platform, the lender schedules a verification process for the borrower.

Borrower Creates an Account

  • Similar to the lender’s account creation process, the borrower creates a profile with all the necessary information.
  • In addition to the basic details, the borrower has to provide collateral like digital assets and legal documents.

Initiating a Loan request

  • Upon successful completion of profile creation, the borrower can request a loan from lenders on the P2P platform.
  • Smart Contracts regulate this loan process by acting as a communication medium between the borrowers and lenders.

Communication between the Lender and the Borrower

  • The lender, once he receives a loan request from the borrower, he will schedule an interview with the borrower
  • This interview is a part of the lending process, and post this session, the lender either approves or rejects the loan.
  • The interview usually comprises the following questions:
  1. What is the purpose of the loan?
  2. What is the borrower’s monthly income?
  3. What is the tenure of the loan repayment?
  4. How many times have you availed a loan previously?

Smart Contracts fix the ROI (Rate Of Interest)

  • When the lender approves the loan request, Smart Contracts play a significant role in processing the loan.
  • They categorize the borrowers based on their creditworthiness and decide interest rates according to the category.
  • The borrowers are classified as low-risk, medium-risk, and high-risk borrowers based on their repayment rates.

Lender Credits Borrower with the Loan

  • Post the successful completion of the interview process, and if both the parties agree on the Terms & Conditions, the lender sends the loan amount to the borrower.
  • The lender transfers the money to the borrower from their wallet. The borrower is now liable to repay the loan within the stipulated time (loan repayment tenure)

Auto-Repayments through Smart contracts

  • When it’s time to repay the first installment or EMI, the borrower initiates repayment through Smart Contracts, integrated with the wallet.
  • If the borrower fails to repay any EMIs on time, these Smart Contracts will automatically add late payment fees to the original loan amount.

“The borrowers are advised to repay the loans on time to avoid penalties and instant loan approvals in the future.”

P2P Lending Vs. The Stock Market?

The choice of investment you prefer ultimately depends on how the investor lying inside you think.

If you are willing to

  • Invest your valuable time and energy
  • A lump sum of money into your portfolio
  • And of course, if you can calculate the trends in the share market

Then the Stock Market is the best choice for you. Once you invest in the market, you will get higher returns within a week, or it can take a month or two.

On the contrary, if you don’t have adequate knowledge of the stock market, then Peer-to-Peer lending is the best option for you.

The Future of P2P Lending

The entire world witnessed the sudden rise of P2P lending from a market niche to a significant player in the financial industry. Individuals and businesses always look for a faster and hassle-free way to borrow money. P2P lending is one such way. These platforms are more flexible and efficient than the banks; therefore, they attract a more massive crowd of borrowers and lenders. Within five to ten years, P2P-based loans will replace the traditional loan procedure.

Spread the love
  • 10
  • 7
  • 12
  • 9

118 thoughts on “Are P2P Lending Platforms Replacing the Traditional Loan Systems? Find Out Yourself!”

  1. Pingback: liquid tadalafil citrate

  2. Pingback: tadalafil india generic

  3. Pingback: sildenafil 20 mg tablet

  4. Pingback: generic sildenafil usa

  5. Pingback: natural viagra

  6. Pingback: sildenafil viagra 100mg

  7. Pingback: sophia viagra

  8. Pingback: sildenafil generic viagra

  9. Pingback: coupons for sildenafil

  10. Pingback: amlodipine and leg swelling

  11. Pingback: tadalafil cost india

  12. Pingback: levitra expiration date

  13. Pingback: hydroxychloroquine 200 mg cost

  14. Pingback: metformin leg cramping

  15. Pingback: cialis insurance coverage

  16. Pingback: amoxicillin clav

  17. Pingback: doxycycline 100mg tablet price

  18. Pingback: lasix 80 mg

  19. Pingback: xenical 120mg uk

  20. Pingback: dapoxetine cialis

  21. Pingback: propecia hair loss

  22. Pingback: bimatoprost considerations

  23. Pingback: clomid pct plan

  24. Pingback: fluconazole 50mg thrush

  25. Pingback: motilium buy

  26. Pingback: hydroxychloroquine success stories

  27. Pingback: tamoxifen mannen

  28. Pingback: prednisolone 1

  29. Pingback: naltrexone weight loss drug

  30. Pingback: valtrex side effects medication

  31. Pingback: tizanidine for ms

  32. Pingback: cheap plaquenil over the counter

  33. Pingback: cialis black reviews

  34. Pingback: ciprofloxacin interactions warnings

  35. Pingback: cialis pills price

  36. Pingback: cialis online pharmacy

  37. Pingback: cialis prices walmart

  38. Pingback: cialis wiki

  39. Pingback: viagra for men

  40. Pingback: tadalafil vs sildenafil

  41. Pingback: order viagra online

  42. Pingback: hydroxychloroquine stock symbol

  43. Pingback: ivermectil head lice effect on women

  44. Pingback: danek acyclovir berlanga

  45. Pingback: chloroquine and hair loss

  46. Pingback: pastillas priligy

  47. Pingback: stromectol for roundworm

  48. Pingback: hydrochlorothiazide 12.5 mg reviews

  49. Pingback: amlodipine half life

  50. Pingback: omeprazole dosage

  51. Pingback: is sertraline the same as zoloft

  52. Pingback: how long does it take lyrica to work

  53. Pingback: womens viagra

  54. Pingback: cymbalta side effects weight gain

  55. Pingback:

  56. Pingback: viagra without a doctor prescription

  57. Pingback: lipitor alternative

  58. Pingback: canada viagra

  59. Pingback: canadian pharmacy generic viagra

  60. Pingback: can you order cialis online

  61. Pingback: purchase cialis online

  62. Pingback: does lexapro cause hair loss

  63. Pingback: cialis 10 mg tablet

  64. Pingback: deltasone and tylenol

  65. Pingback: ivermectin online

  66. Pingback: cialis sex pill

  67. Pingback: plaquenil have penicillin in it

  68. Pingback: viagra pill

  69. Pingback: safe place order viagra online

  70. Pingback: ivermectin uk

  71. Pingback: best generic viagra

  72. Pingback: duloxetine for neuropathy

  73. Pingback: 1

  74. Pingback: ivermecta clav 875 mg

  75. Pingback: viagra samples

  76. Pingback: viagra cialis

  77. Pingback: buy viagra discreetly

  78. Pingback:

  79. Pingback: viagra 100

  80. Pingback: generic viagra buy canada

  81. Pingback: amoxicillin 500 uses

  82. Pingback: purchase viagra from india

  83. Pingback: tadalafil 5mg price

  84. Pingback: propecia 5mg over the counter

  85. Pingback: viagra online usa

  86. Pingback: how can i buy cialis

  87. Pingback: prednisone pill 10 mg

  88. Pingback: viagra cost

  89. Pingback: ivermectin 12 mg 5 cc

  90. Pingback: purchase cialis

  91. Pingback: buy viagra online us pharmacy

  92. Pingback: using ivermectin for heartworm treatment

  93. Pingback: sildenafil medication

  94. Pingback: chewing cialis tablets

  95. Pingback: order generic viagra uk

  96. Pingback: does ivermectin kill scabies eggs

  97. Pingback: cialis for sale online

  98. Pingback: ivermectin pancreatic cancer

  99. Pingback: buy zithramax online next day delivery

  100. Pingback: jeffers ivermectin

  101. Pingback: what parasites does ivermectin kill

  102. Pingback: buy ventolin inhaler cheap

  103. Pingback: can i buy viagra in australia

  104. Pingback: cvs price viagra

  105. Pingback: ivermectin benefits for humans

  106. Pingback: ivermectin for humans walmart

  107. Pingback: female viagra pill at walmart

  108. Pingback: chewy ivermectin

  109. Pingback: online viagra cost

  110. Pingback: buy cialis pills

  111. Pingback: cialis 20mg pharmatize

  112. Pingback: z pack nausea

  113. Pingback: viagra pills for men

  114. Pingback: buy cialis online reddit

  115. Pingback: ed pills gnc

  116. Pingback: lisinopril and hoarseness

  117. Pingback: cialis for sale uk

  118. Pingback: buy ssri dapoxetine

Comments are closed.