5 reasons for considering a peer to peer lending
A good habit is that we shouldn’t borrow money, but sometimes you have no choice. And, then what? Then, I usually go to the bank and I get stacks of papers, certificates and not necessarily good conditions. However, the solution is as follows: if you’re lucky and smart, you can take non-bank loans, peer-to-peer lending, or even a loan via the Internet. Here are five reasons why you should be interested in such ways.
The first reason – Saving does not cope with inflation
Every year, interest rate on deposits and savings accounts is getting lower. It starts even to reach the level of inflation, which makes that saving for the future loses any sense.
Consequently, even better is to invest money in gold rather than waiting for the unknown future expenditures. Although, it is better to save in that way than keep sock money, because in such a case I won’t break even. But much better is to invest in something with a higher rate of return and which is easy to monetize (and not, as in the case of investing in gold) and, for example, be a social lender.
If you are interested in an alternative way for a loan, be sure to check out the article describing the peer-to-peer lending.
The second reason – non-bank loans are easier
When making a loan via the Internet or stationary loan in a loan office you do not have to fill a stack of papers and bring certificates. I didn’t need have protection, because sometimes there is only a need to have an identity card. Although higher risk is associated with higher fees, the time spent on completing all formalities and certificates is also valuable, because time is money.
Before signing the non-banking loan, as in the case of a contract with the bank, carefully read all the documents to know all the costs associated with the loan. Eveyone doesn’t want any additional costs or hidden problems. Usually, you only need to register, eg. in the Internet system to become the lender or the borrower.
The third reason – diversification and investment
Peer-to-peer lending is an interesting idea, not only to receive money, but also it’s a good practice for investment. Currently, interest rates in the banks are very low and virtually impossible to make deposits. Peer-to-peer lending companies are looking for investors all the time and offer much better interest rates than the banks. For example, by investing money in Zopa* you can get from 3.1% to 6.1%. Current deposits in banks are within 1%. It is worth noting that many stock investors
obtain lower rates of return, but they don’t want to admit it to others and to themselves.
The fourth reason – peer to peer lending are growing in strength
The number of websites offering peer-to-peer lending are increasing year by year. For example, in the UK between 2005 and 2016 year of 150,000 users took over nearly seven trillion pounds – as is reported by the Peer-to-Peer Finance Association. Checking the number of loan companies in the last year and comparing it to the current year, I noticed that the number has doubled and therefore it not only easier to find an interesting offer as the borrower, but also as a lender.
Peer-to-peer lending in virtual currency Bitcoins are already available*.
The fifth reason – non-bank loans save the economy
It’s not simply a matter of your own wallet. Very often small companies go to non-bank institutions for funding, ex, to companies providing peer-to-peer lending. In the past, the companies was doomed to banks because it is still a very strong belief that you can not open a business without money. Nowadays, more important is the idea of capital.
NOTE: I present private opinions and I am not responsible for the readers’ decisions. I always try to present current information but may no longer be up to date. Therefore, before making a decision, please verify them and consult a licensed financial adviser.