Peer-to-peer lending: What's behind it
Posted: Mon Feb 17, 2025 10:34 am
As the name suggests, peer-to-peer loans are based on one person providing money to another person. However, the person providing the money is not a traditional credit institution. Rather, the lender is a private individual. For this reason, P2P loans are also called private loans.
Today, there are many different P2P marketplaces and lawyer database platforms on the Internet . Credit requests can be made on these. Investors then decide whether they want to provide the requested financial resources. When the loan is granted, the borrower is charged interest - just like with a conventional bank loan. The platforms act exclusively as intermediaries and therefore only charge a one-off fee from both parties to the loan.
An important feature of private loans is that they generally have higher interest rates than traditional bank loans. In some cases, these can be over ten percent. In recent years, when interest rates were low, these were not to be underestimated. However, the interest rates on regular online loans are currently rising sharply again, so there is no longer a huge difference.
Today, there are many different P2P marketplaces and lawyer database platforms on the Internet . Credit requests can be made on these. Investors then decide whether they want to provide the requested financial resources. When the loan is granted, the borrower is charged interest - just like with a conventional bank loan. The platforms act exclusively as intermediaries and therefore only charge a one-off fee from both parties to the loan.
An important feature of private loans is that they generally have higher interest rates than traditional bank loans. In some cases, these can be over ten percent. In recent years, when interest rates were low, these were not to be underestimated. However, the interest rates on regular online loans are currently rising sharply again, so there is no longer a huge difference.