P2P Loans as an Alternative to Bank Credit
Anyone looking for a quick, uncomplicated microcredit will sooner or later involuntarily encounter so-called P2P loans. These are loans that are given by private investors to companies or private individuals. Only rarely does one obtain his entire loan amount from a single investor. Rather, the loan is made up of the sums invested by different providers in variable amounts. But also P2P loans are subject to conditions.
Definition P2P – what are these loans?
P2P stands for Peer to Peer or Person to Person. That means translated from person to person. It already shows that these loans are given by private individuals, not by abstract constructs that hide behind the obscure title “bank”. So you have to deal with the loan request with real people who provide their own savings on loan. Banks only accept the transaction processes for P2P loans. However, they have nothing to do with the approval, repayment and interest payments.
How to get such a peer-to-peer loan?
Peer-to-peer loans (private loans) are still almost unknown to many German borrowers. To apply for them, you have to register on an appropriate P2P platform. But even with the request for a person-to-person loan, a commitment is not guaranteed without further ado. Private investors also want to have collateral. A proof of income and a Schufa-information are the least. In addition, the borrower should be prepared, with a lower credit rating, to possibly meet investors on higher interest rates. Because he has to convince the private lenders of himself and his trustworthiness. This includes a personal profile. Anyone who hides behind anonymous profile pictures and reveals neither the purpose of his desired loan nor details of his private and financial background, risks rejecting his loan request. Unlike banks, claimants in P2P platforms are not convinced solely by their credit rating. Trust from the lenders has to be worked out a bit. It shows that it is actually dealing with people, not with a globally operating financial apparatus. The more readily one responds to questions from the lenders, the deeper insights one allows in the purpose and thus in the risk potential for the investor, the more likely and faster you get a commitment to the P2P loan. This is even more so if you need the loan for your own investment project – such as real estate or self-employment. Of course, the amount of the desired loan also plays a role. A successful loan request is closely linked to the politeness and informational desire of the applicant.
Are peer-to-peer loans an alternative to bank loans?
Whose chances at the bank on a personal loan tend to be bad, can maneuver with a P2P loan from a short-term bottleneck, yes. Loan commitments are usually faster at P2P exchanges than at banks. And also for people who are not 100% secured. However, they themselves have to be much more active in this form of credit than at the bank. You need to convince real people of yourself and your projects – whether you’re applying for an investment loan or a personal loan. Not infrequently, interest rates on P2P loans are also significantly higher than on bank loans. So you have to weigh exactly whether a P2P loan is a sensible alternative for your own benefit. Comparisons create clarity.