5 Reasons Why Borrowers Should Turn to Peer to Peer Lenders Instead of the Banks

The following is a guest post about peer to peer lending. If interested in submitting a guest post please read my guest post policy and then contact me.

Since the economic crash of 2008, mainstream lending institutions have reacted by significantly reducing their lending to both consumers and businesses, contributing to the economic recessions the UK and the rest of Europe have recently endured. However, peer to peer lending has emerged in recent years as a viable alternative, and these are the key reasons why:

1. Faster approvals

Large traditional financial institutions typically take significantly longer to assess and approve loan applications than the new wave of alternative finance providers. The innovative technology and efficient business models employed by these alternative providers enables loans to be assessed, approved and paid out often within one to two business days.

2. Lower interest rates

Personal loan borrowing rates have increased sharply over the course of the last few years, making borrowing a very expensive, and in some cases unaffordable, endeavour. However, peer to peer lenders can offer extremely low rate loans by connecting borrowers directly to lenders, cutting out the traditional financial institution in the middle.

Peer to peer lending platform providers are able to offer market leading rates because they don’t have the large overheads, numerous branches, thousands of staff, big bonuses and shareholders demanding regular dividends like a high street bank. This low cost base allows borrowers to take advantage of the type of low-cost borrowing that simply can’t be found on the high street.

3. Simple application processes

The online application process provided by peer to peer lenders, is extremely simple to complete. All peer to peer loan applicants are still required to undergo a thorough credit check, as well as demonstrating an ability to repay the loan. However, this process is highly efficient and can take as little as a few hours to complete in most cases, while the lengthy and complex application processes operated by the banks can take several days to negotiate.

4. The knowledge that you’re borrowing from real people rather than the banks

The chaos and misery caused by the banks over the last few years has left many consumers and business owners incredibly bitter and angry. If you are worried about taking out a loan from a traditional bank, or you simply don’t want to give the banks your business, peer to peer lending is a great alternative. Not only can you secure an incredibly low rate loan, you will be helping hard-pressed savers just like yourself to achieve a proper return on their capital in the process.

5. Lower fees

Taking out a loan with a traditional lender usually involves an application fee, an arrangement fee and a myriad of other charges that may apply throughout the course of the loan such as early settlement charges. However, securing a loan directly from other individuals can significantly reduce these fees – further reducing the cost of your borrowing.

At a time when credit is scarce and expensive, peer to peer loan arrangements are growing increasingly popular. And as the number of lenders increases, so do the amounts available to borrow. Whether you are an individual looking to make some home improvements or a business owner looking for investment, you should seriously consider peer to peer loans as a real alternative to the high street banks.

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