Advantages of Social Lending

There are many advantages to using social lending websites rather than using a more traditional financial institution to meet your lending needs.

The most common advantage for borrowers is that there are often better interest rates and terms than you could find at traditional banks and other lenders.

Most lenders (who are other individuals with some disposable income) like this option because it offers returns that are greater than those which are traditionally available using a regular savings account.

This is a win-win situation for all who are involved. In fact, it is possible for both lower interest rates for borrowers as well as higher return of returns for lenders due to the fact that there is very little overhead involved in the whole process.

Traditional banks and credit unions have a lot more overhead and regulations that they have to deal with which can force them to have higher interest rates in order to remain profitable.

In addition, most banks have physical locations which, of course, comes with additional expense. Social lending, or Peer-to-Peer lending as it’s commonly called, typically handles the entire transaction entirely online so there are no large expenditures necessary for buying property for the lender.

This allows a lot more room for profitability at much lower interest rates than is normally possible with traditional lenders.

Peer lending companies and their customers have seen considerable growth lately. This is because of the social nature of this type of transaction.

Many people will talk about it which brings it additional attention and customers. It becomes a self-fulfilling viral action. As more borrowers and lenders join this type of lending, it will continue to offer more benefits to both parties.

Another advantage to social lending is that many people with poor credit history can still get loans.

The credit reports are made public to potential lenders though, so they often charge higher interest rates for people with a bad credit history.

While higher interest rates are a disadvantage of getting a loan with bad credit, this is also the case when going to traditional lenders.

The difference is that many people with poor credit can at least get some sort of loan when they need it, and usually, if a traditional lender is willing to offer the bad credit risk a loan, it’s usually at much worse terms than they would get from a social lending website.

Giving people this extra option to try when they are having trouble getting another type of loan makes social lending a very popular option for many people.

Whether they have excellent credit or terrible credit, there are options available that will meet their needs. Working with a group of lenders often makes it very possible to successfully get a great loan.

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