Peer to peer lending is an alternate funding method that is becoming increasingly popular across the United States. This lending method is funded by individual investors willing to provide money for loans in return for an attractive interest rate on the money they invest in the loans.
However, there is on going speculation; are we now in an era where we are seeing peer-to-peer lending replacing the traditional banking methods?
Peer-to-peer lending does involve taking some risk, and they are not currently covered by the FSCS (Financial Services Compensation Scheme). The value of a lender’s loan book will vary and can fall as well as rise, with the possibility of a complete loss.
Social lending firm, Rainfin says it is listing 18 new loans per day.
AvantCredit, which makes loans to consumers using its own capital, has secured a $200 million credit facility led by the investment bank Jefferies.
So she went to Lending Club, a website where consumers request loans and a variety of individuals invest to fund those loans, to considerably pay down this debt. The loan’s annual interest rate of 7.99 percent is lower than what her credit card currently charges.
A recent Fitch Ratings report shows that the peer-to-peer (P2P) digital banking space has become a billion-dollar industry and is growing fast.