Signature Personal Loan

Why Peer to Peer Lending is better than Cash Advance Lending

Peer to peer loans have gained much popularity in recent times because of its pro-customer centric style of lending. The social media presence online is more active than ever before and it is going to grow manifold in the next few years. Though we have had many forms of conventional loans, they have come with some or the other niggle, and although there has been an improvement in every successive lending concept, nothing has been as convincing and as user-friendly to the borrower as the peer to peer lending platform

The peer to peer lending system works by the borrower going to one of the reputed peer to peer lending account, signing up and making a request for the loan. You may have to state the reason as to why you need the loan and your existing financial position. You do not have to be embarrassed about your request because the system is based on the premise of helping people financially no matter what the obligation as, as long as it is ethical.

When you give your request, the peer to peer lending sites match the borrower’s demand with the rightful investors. Since there are many investors who may be willing to oblige, the borrower can leverage the situation and go for the offer with the low interest rate as repayment. Both parties benefit from this arrangement, the borrower gets the money according to his or her need and the individual lender can receive his money back along with better terms of interest better than what’s he would get in a financial institution with a modest rate of growth. The peer to peer lending website also makes money by collecting a small amount as commission for the service offer.

Along with peer to peer lending, there is a system of payday loans or cash advances which are also quite popular for short term lending. However, when you compare both these modes of lending, it is seen that the people are more in support of peer to peer lending for the following reasons-

1. Low interest rates– Both cash advances and peer to peer lending are unsecured loans but in the case of peer to peer lending, the interest rates are even lower. A cash advance or a payday loan is a high risk loan with interest rates that can go in triple digits. But in case of peer to peer lending; the interest rate can be anywhere between 7 and 2 percent.

2. Longer term period- While cash advances or payday loans have short term repayment period, wherein you may have to give back the money by the next paycheck, in case of peer to peer lending, you can get an extension of anywhere up to 5 years also to make the payment comfortably.

3. Transparency- There is a personal touch about peer to peer lending , you can get support from a community if you are not able to repay the funds or if you need more support or anchorage. Also, the interest rate is fixed for the life of the loan; this means there are no variable rates and the charges do not fluctuate with time.

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