Peer to peer lending

Peer to peer lending

As we know modern technologies change our market dramatically and in recent years companies, which thanks to new solutions effectively compete in the business market, are created. A good example would be here, – Ebay, which allows replace shops and marketplaces, Uber – allows replace taxis and Airbnb – hotels. Therefore, we can observe systematic development of business cash. Therefore, loans in the UK are now red-hot thanks to the well developed system… To date, banks were engaged in lending money at interest, thanks to new technologies, this state of affairs became the domain of ordinary people, platform and software that connect people, who have money with those who want to borrow it, were created. So, it is much cheaper and the loan in the UK, thanks to such systems, works faster and more efficiently than a bank loan. This system is used even by the investors themselves, because there are better return on investment of the borrower, because then we pay a lower interest rate, because the founders of the platform also earn on it.

Obviously this is a peer-to-peer, i.e borrowing money by way ,,you to me „or” between themselves”. Investors then lend the money to borrowers, and borrowers pay a loan with no interest, and everything is coordinated by the company, ensuring that everything goes right. Here, even unreliable debtor, who will choose the loan through the Internet will be prosecuted for violation any terms of the contract.Loans in the UK and their profitability depends on the platform you choose and the period for which we want to borrow our money. From this it can be observed that generally from 4% to 6% of people use this type of investment per year. Some bank investors will probably be disappointed, but remember, if we would receive a higher percentage, the borrower had to pay higher interest rates. By which it would be harder for them and the total number of outstanding debts would be higher and the model would cease to operate. Therefore, you should be carefull in choosing online loans

So, what platform peer-to-peer should you use, in order not to lose?

On English market is a plenty of companies, but we include only the largest and the oldest in the industry – there are a few of them:

  • 3-year investments = 4%
  • 5 years investments = 5.1%

Interest paid monthly

Zopa is for 10 years on the market. It is regulated by the Financial Conduct Authority and is the largest company on the market. It is s protected by the FSCS and it constitutes a risk

  • Loans from £ 5,000 to £ 1 million on interest rate – 7.2%
  • an average interest rate of 6.8% for investors with five years investment

The company operates on the same principle as Zopa. In 2015 the company obtained the title of the most trusted platforms borrowing money from Moneywise.
The company lends money to private individuals. We invest cash here for 5 years and the interest rates we pay monthly or annually.

  • 6.8% interest paid monthly or annually

The company lends money to companies, not to individuals. You can choose comapnies individually or take advantage of the Autobid.

Currently, there are over 8,000 companies and over 40,000 people who invest through this platform.

How does the online loan work?

So, peer-to-peer lending, or credit in the UK usually looks similiar and that means that we can choose the money once a month, once 3 months or once a year by sending them directly to our bank account. Of course, getting money does not involve any additional fees, but here it is worth noting that when we will choose investments for a period equal to 5 years and after 3 years you will take the money, we get interest as investing for 3 years. Some platforms also allow you to set some options, eg. to decide what happens with the interest (whether they will be reinvested or whether they will get back to our account or to whom to lend money). Each of the platforms or companies has fully described detailed information about the investment process on its website.

Peer to peer lending is probably the best system on the English market, characterized by speed, here borrowing money to non-relatives is carried out without intermediate the traditional financial intermediaries such as banks or other traditional financial institutions. In addition, loans in the UK are readily available, but it must be remembered that before you invest your money, you should read all the information on websites and at a long hard look at decision. You should also look on the internet exactly what characteristics has the loan in the UK and online loans, look at the amount of opinion on this subject, read the entries on forums and several articles. This is probably the most popular way to learn something about the loan in the UK. We should also remember that peer to peer lending is system not protected by the FSCS, and in case of problems with the liquidity of the company, you can lose your money…Therefore, people like investing in a peer-to-peer loan, because they receive full interest and the companies do not pay them for us (such as banks) and it all means that the loan in the UK in this respect is much more interesting than the loan in banks, because here from additional revenues sufficient it is enought to settle individually. This is obviously not complex or difficult, just in the annual tax declaration, you should enter your income, which you received from the employer and in the rubric with additional income you shoul enter your income derived from the investment. This declaration can be sent online by the end of January of the following fiscal year, if that year will end in April, we must send this by the end of next January and after sending a tax declaration you must pay tax on profits – 20%. What is more, the users, who want to take a loan in the UK must be verified in several ways in order to maximize the security of transactions and return of borrowed funds. Here, the most important aspect is the possibility of taking a loan just from several pounds!

Peer-to-peer lending – Summary

Slowly coming to the end of the material I would say that online loans and loan via the internet are now social business models that use crowdfunding and peer-to-peer lending strength to fill the gap of the capital market. Otherwise, it is a model of platform that allows applicants to issuing a request for a loan with a description of the amount of money, purpose, and determination of interest rates. On the other hand, the owners of capital decide whether they want to pass the capital to the borrower on certain conditions. Here, I mention that in order to use this type of platform, you should simply register online (registration form plus a scan of an identity document), and all costs of verification of potential borrower are assumed by the institution in other operating companies, but such verification is additionaly paid, because the platforms believe that it is in the interest of the borrower, so you should careful where you want to get money. I sincerely hope that the information I have given will be useful and will make that you achieve a better return on investment.