The P2P Lending Puzzle
Quick Scenario:
You’re about to go through a 12-week software programming school that costs $10,000.
For whatever reason, you don’t have the full tuition payment up front for your classes.
You want to get tuition paid and start doing what matters, learning. This is when P2P Lending comes into play. You can borrow a peer-to-peer loan with a fair interest rate and make payments without dealing with a bank.
My suggestion, borrow from a P2P platform.
Why?
Because in the new world of Peer-to-Peer lending, literally everyone wins.
The two main pieces to the Peer-to-Peer puzzle:
Borrowers (you) sign up by entering your credit information (to make sure you are capable of obtaining and paying off the loan.) After being verified to borrow, you can post your loan to a peer-to-peer platform of your choice. (The top platforms in the US are Lending Club and Prosper)
Lenders (investors) go through P2P platforms and invest in the loans posted by borrowers based on the loans risk profile. Investors diversify their portfolio with different types of loans (Small business, Student loans, ect.) to reduce their level of risk and maximize their ROI. Different platforms use different metrics to show investors how likely a borrower is to default. (Defaulting is failing to pay a loan off) Common identifiers are AA and BB being the best lowest rick, to HR meaning high risk.
When you put these two pieces together you have a P2P Lending platform.
Borrowers have a monthly payment (with an interest rate) that is split up and sent to the investors that funded their posted loan. This monthly payment means that investors are making recurring revenue from their investments. This is why the industry will loan over $1 trillion by 2025. Investors are sprinting towards P2P Lending.
I like to think of P2P as investors crowdsourcing loans for borrowers.
Why/how does everyone win?
Investors make recurring revenue, and high returns from their low risk investments.
Borrowers receive their loans quicker and cheaper than any bank could provide.