As a pretty new way of borrowing and investing money, peer to peer lending (P2P) is increasingly popular. Here are the best P2P lending firms to use, plus the risks to know first…
Peer to peer lending certainly has its perks (not least the great interest rates on your investments) but it’s not without risk.
To clarify some of the confusion around P2P lending, we’ve put together the key facts about how it works, the risks involved and the best lending platforms to use.
So, if you are keen to try peer to peer lending to either borrow or invest money, read on for the info you need to get started.
What’s in this guide?
What is peer to peer lending?
As the name suggests, peer to peer loans are lent by people to other individuals or businesses (i.e. from one peer to another).
The money is lent via lending companies, which manage the loan distribution and repayment process.
Borrowing P2P loans can seem tempting at first glance. The lending platforms generally offer a wide range of loan amounts with competitive rates. While they can help in some situations, we’d urge you to consider your other, lower-risk options first – particularly the government’s Student Loan.
Also, lending money through peer to peer firms can see you earning a fair amount of interest on the money you invest. When done carefully, there’s the potential for you to make more money than you would if you used a savings account. But, bigger interest rates come with bigger risks.