P2P Loans vs Bank Loans
In these modern days, many Indian borrowers are being familiar with the peer-to-peer (P2P) loan which is rapidly growing in India. Many people now want to get only p2p lending when they are in need of getting loan for any emergency financial situations. The banks are just the credit unions in India to offer unsecure personal loans which are also known as signature loans. For providing this loan offer, they don’t require any collateral from the borrowers. But still the banks are leading players of the lending industry in India.
The main reason for this is the strong foothold of the banks in the country for many years but peer to peer lending has only been available for 2 years. At the same time, the peer to peer industry has started to make the biggest impact on the nation due to its wonderful loan offers and lending benefits to the borrowers.
Main part of peer to peer (P2P):
|P2P Loans||Normally, Unsecured personal loans, operated entirely online|
|Loans are Characterized based on||Time Factor, Costs and Risk Involvement|
|Loan Types||Short Term Loans, Intermediate – Term Loans, and Long Term Loans|
|P2P Benefits||Cheap fund raising option for individual and also for small businesses|
|Cost Factor||P2P Lending cost lesser then other mode of loans|
Peer to peer lending is actually a kind of personal loan transaction. Even with this new type of lending, the borrowers can able to borrow money from the bank. The individuals make a decision whether they wish to invest in your loan amount which is the main part of p2p lending. If the sufficient amount of investors propose to make investments in your loan, your bank will make it to you. Then, the bank will sell your loan amount to the investment company which improves it security level into debt held by the p2p investors. These investors or p2p lenders actually include prosper and lending club. P2P loan process will boost fuel for India’s growth.
Banks or P2P loans:
A lot of Indian citizens agree with the concept that all need better investments and financial security as Indians. This is very true while getting loans. Many of them are afraid about taking loans from the banks because they feel unsafe and about the increased interest rate. Thus, the new concept of getting loan called peer to peer (P2P) has been introduced in Indian lending industry as the best alternative financial source instead of banks. Everyone should need to clearly understand the concept of the P2P lending before going to borrow the loan amount. Almost all people in India generally think if they have a chance to get the loan at 11 to 13 % from the banks then why they should pay more interest. Apart from the interest rate, the borrowers also need to pay the processing charges for loan amount, repayment mode swap charges, prepayment fees, file handling charges, and more. By avoid all these hidden fees, it is better going to the new concept of peer to peer loan in India.
Lower fees and interest rate:
The Indians always want to minimize the loan processing fees and interest rate when it comes to the loans. The P2P (Peer to Peer) lenders will allow all borrowers know the actual interest rate on their loan amount without negatively impacting their credit score. The credit history will be a major part of the interest rate regarding the loan amount. For making you qualify for getting peer to peer loan from the lending company, it is better ask an advice from the loan experts. But there are no hidden fees and highest interest rate in p2p loan as compared to the bank loans. There are only lower fees and interest rate with the peer to peer lending in India.
Issues faced by the borrowers in bank loans:
The following are some of the issues generally faced by the borrowers when it comes to the bank loans. Similarly, here are the best solutions how the peer to peer lending will solve those issues.
- Credit score – The main thing when it comes to the bank loans is the credit score of the borrowers. If a person has a credit score less than 700, then he or she would not able to get a loan amount from the bank. But P2P lending provides loans to the borrowers even if you have bad credit score.
- Documentation process – The documentation process followed by the Indian banks are more time consuming but the peer to peer documentation process is easy, simple, and also quick. The borrowers don’t need to wait for a month to get the approval for your documents and loan amount. P2P lenders will give immediate approval and fast sanction of loan to the borrowers.
- Lower cost – The banks require borrowers to pay highest cost for every loan processing and also highest interest rate. But peer to peer (P2P) platforms will offer only lower cost credit options to the borrowers and there are no hidden fees in P2P lending.