Why P2P Lending Should Be Considered As Safe

No one ever thought that one would be able to borrow money at the comfort of their house via the internet and get it instantly. But today, peer to peer lending services or crowd lending as it is commonly referred to, has come at a right time. P2P as it’s usually abbreviated, was innovated in the year 2005 by a firm Zopa in United Kingdom and since then it has welcomed and used in a number of countries and those who are said to have benefited much are the small sized business enterprises who were shunned down by the banks there before.

Is P2p Lending safe? Here is the process involved

In this setup, a borrower visits an intermediary who is an online site fills the necessary documents online and the intermediary gets the money from the lender and gives it to the borrower in no time. The intermediary does the following to ensure that the lender and borrower are satisfied:
i. He markets the services to both the lender and borrower,
ii. Ascertains the creditworthy of the borrower before granting a loan,
iii. Acts as the link (intermediary) between the borrower and the lender.

Benefits of Peer To Peer Lending

A. To the borrower

i. One is able to access a loan at the comfort of wherever one maybe provided there is internet connection,
ii. Most small scale business people and even students can now access a loan without much hustle compared to how they were treated by the banks in the past.
iii. Loan processing time isshort and easy,
iv. The interest rate is lower compared to other financial institutions
v. There is no rate increment, it’s a fixed amount, and in case one pays earlier than agreed there is no penalty charged,
vi. Lower charges for loan processing.

B. To the lender

i. One does not need to have an office, they are online services only
ii. The interest charged which is lender’s return is substantial
iii. One does not require to employ a number of professionals to look after the operations, only a few compared to what financial institutions employ to run their various branches
iv. Compared to other types of investments like in the security markets, peer topeer is more reliable, no fluctuations if well monitored and controlled
v. When you lend to someone, you give that person some freedom unlike when dealing with the credit cards.


Everything has its pros and cons and p2p is no exception but its advantages surpasses its disadvantages. This service has so far transacted with lots of billions and some governments have used this channels to give money to the citizens, the future is bright. It should be noted that to be able to eliminate the question of whether the op2p is safer, firm measures need to be undertaken to keep in check the default rate. It has been reported of some firms collapsing and moving out of business with a 100% default rate. It’s an alternative financial service provider and its operations has provided a passive way to earn some interest on cash and it’s a positive effect of technological advancement.