What Is Peer To Peer Lending (P2P) and How Does It Work?
Also known as social lending and person to person lending, peer to peer lending is lending that takes place between individuals. Instead of having to go through the traditional route of borrowing money from a bank or even lending money to a bank in the form of deposits, people can log on to a peer to peer lending networks, such as Lending Club or Prosper and lend and borrow money from others who are also members of the network. Thanks to the advent of the internet, people may find it a lot easier to borrow money for different uses. These websites that feature P2P lending allow regular people to assume the role of a banker and face the same risks as well as benefit from the same rewards. Many people who want to start a small business or maybe work from home on a part-time basis could not find a bank that would give them a loan. Of course their risk of failing was higher than a loan backed by collateral such as a car or house note. P2P lenders online lend money to people who are looking
