Less than a decade ago peer-to-peer lending started with the founding of Lending Club, Prosper Marketplace, Zopa etc. – a service that would in a very personal way link would-be borrowers with individual lenders and bypass the banking industry.
Peer-to-peer lending essentially matches up consumers interested in a loan with investors willing to lend to them. Depending on the score of a loan applicant, they’ll be issued an interest rate for their loan and then potential investors are given the opportunity to gauge whether or not they consider the loan a worthwhile risk. The applicants with the lowest credit scores are dealt the highest interest rates, though these rates are often much lower than what an applicant is already paying.
People who’ve turned to peer-to-peer lenders in a bid to get a better rate on their savings have been given the the thumbs up by savers, new Which? research can reveal.
And now institutional investors are tripping over themselves to buy so-called peer-to-peer loans offered by internet lending companies, a development that could transform the nascent sector into significant player in the credit markets. The influx of institutional money is enabling online lenders to offer far more loans and compete more directly with traditional banks.
Will peer-to-peer lending disrupt traditional banks?
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New business models will emerge – peer-to-peer lending — http://www.torbenrick.eu/t/r/gfl
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