The world never stays still. It is constantly changing and developing. In the twenty-first century, it feels particularly dynamic: rapid growth of technology and globalization became an integral part of our lives. Each of us daily faces various aspects of technological progress and information exchange.
Separately it’s worth noting the financial sector as a standing on the front-line of technological progress. In the developed and developing world, it has long become synonymous with a dynamic and changing world and a symbol of global links between the countries and corporations. World’s leading research centers have already drawn attention to this relatively new segment of alternative finance market and are quite optimistic about its prospects.
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How peer to peer loans are developed?
Р2P-lending is a mechanism of borrowing between the individuals through the special online-platforms. Its basic idea is that people can lend money to each other without the involvement of the financial institutions: banks, credit unions or microfinance organizations. The world’s levels of Р2P-lending already amount to tens of billions of dollars, and they grow every year.
How do p2p loans work?
Р2P stands for “peer-to-peer” or “person-to-person”. Future creditors and borrowers are registered on рeer2peer-platforms – Internet resources or programs, installed on smartphones, and conclude loan agreements right there. Unlike in banks, people arrange with each other about the debt stock, interests and maturities.
How to invest in p2p loans?
It works like this: investors and borrowers are registered in the system, after which the former get access to the requests placed by the latter. Investor can view them at any convenient time in search of advantageous offer, taking into account the interest rate, terms and rating of borrower. The latter depends on the data that the platform requests for each applicant in the credit reference bureau. The loan agreement is concluded with р2р-platform, which takes a commission for its services. As a rule, this is a % of loan amount. Both one and several persons can be the creditor on one loan.
How peer2peer loans are developed nowadays?
Such system is actively developing in the world. In this, one can borrow not only dollars or pounds, but also cryptocurrency. For example, some platforms of P2P credit allow one to borrow bitcoins.
How peer 2 peer loans key configurations of companies on Р2Р market act:
- online platform, requiring the mandatory registration of participants and allowing one to automate the search and selection of borrowers and creditors, reducing the level of cost. Most often all participants follow how p2p loans analog of credit rating is calculated, determining the interest rate and other conditions;
- classic intermediary, who provides the legal support of the direct lending transactions, focusing on the deposit as a way to minimize the risk. Intermediary is also responsible for the means test, expert real estate valuation and meeting of investor and borrower in real time at minimal cost.