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How does it work for savers?

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All peer to peer lending websites operate by the same simple scenario. They match investors directly with those people who want to take a loan. No intermediary (like the banks or credit unions) is involved in this process and every participant wins: lenders after investing moneyget the higher returns (comparing to those they could receive in the bank) and borrowers are offered more preferable and lower interest rates. Peer to peer lending investing fits the new lenders nicely, that’s why it is so popular among them.

As over the time the amount of p2p lending platforms has extended, it led to the better opportunities who you can lend to. At first, borrowers were just people who were looking for personal loans. Now, not only individuals, but small and medium-sized businesses take loans as well.

At the majority of p2p lending sites, lenders usually lend money to different borrowers instead of only one borrower. It reduces the risks as the money is distributed into different loans. Thus, if one lender is not able to pay the loan out, the investor won’t lose much.

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How does it work for savers?

One of the main things should think about before investing in p2p is the term for which you can lend your money. Usually, on peer to peer sites such terms can vary from 1 month (the least term) to 5 years respectively. If you want to find a trustworthy website with good terms of loans, we can recommend you https://grupeer.com

If you think that you need a large amount of money for your first online financial investment, that’s not exactly so. You can start from $10, but can also choose the bigger sum to invest – there are no limits at all. You can choose where you want to invest your money. You can invest in business or personal loans and your profit will depend on which loan to fund you’ve chosen.

As theonline peer to peer lending platforms earn money from the fees, you’ll have to pay them too. They are not high and are charged from the interests which you get.

What influences your income?

There are some factors which directly influence the amount of your passive income. They are: the term for which you lend the money and the sum of money which you lend. And one more factor is the people who you give a loan – whether they are the individuals or businesses. In most cases, the longer term – the bigger income you receive. But be sure that you can invest the money for a chosen term. By the way, most of the peer to peer lending platforms can give you your money back in the case of your necessity. They sell your contract to other investors and the investors have the same terms as you had.

Borrowing via peer to peer lending for borrowers

Some features of borrowing money on peer to peer lending website for borrowers.

To get a loan borrowers should have a good credit history. Borrowers should be at least 21 years old to be accepted. The money which they can borrow can vary from $1000 to $25000 thousand dollars, but there can be differences on various websites. Borrowers are offered the terms for borrowing money: from 6 months up to 5 years. Everything can be done simply online and borrowers can quickly understand if they were given a loan and with what rates this loan is.

Some advantages of using peer to peer lending for investors

Diversification

In contrast to the usual methods of financing (like the banks and credit unions), in peer to peer lending investinglenders are able to put their investments into different loans. Such loans can be the business and personal loans or some other.

A possibility to decide

The investors set a term for what they want to lend money themselves. They can take their cash back any moment they want. At some websites you can close your contract only when there is another investor who is ready to fund your loan.

Higher income

And maybe the best plus of using p2p lending for lenders is quite high interest they get. These interests are much higher than in the banks. For example, if a bank offers you only 3% a year, with peer to peer lending you can get from 6 to 30 percent at the same suggested circumstances.

Some advantages of using peer to peer lending for borrowers

Fast and efficient

All the process is taken place online and it does not take you much time. There are no holidays, weekends in peer to peer lending, so you always can get a loan.

One more good variant

While some banks don’t give loans to some individuals or small businesses for different reasons, peer to peer lending always can be another good variant to receive money.

Rate of interest

On peer to peer lending sites borrowers are offered a pretty good variety of interest rates from different lenders. Thus, borrowers can choose that one which fits them best.

The conclusion

As you can see, p2p lendinghas become a really popular financial alternativein Europe. That’s an example of the safe online investment which gives you a pretty nice income. Invest in business loans and get only the best. We wish you good luck!

 

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