Peer to peer lending is growing rapidly with Lending Club, one of the pioneer businesses in the market having recorded a growth of more than 300 percent in the last 12 months as at the beginning of 2013. Loan originations at Lending Club have hit a $1 billion mark and the prospects for growth are high. According to Robert Warren, a business professor at University of North Dakota, he noted that person to person lending is one of the emerging financial lending alternatives that meet the needs of people who are underserved, cannot use the traditional sources or they are not interested in these conventional banks at all.
Banks have been known to be very rigid in offering their services. You will most likely get into a bank to negotiate for a loan application and approval but all in vain after spending your valuable time. However, with the online person to person lending, you are able to get suitable loan that can meet your financial challenges. One of the main questions, which critics in the financial market ask is; what is driving the rapid and steady growth of the peer to peer lending?
Brad Lensing, the chief marketing officer with Prosper lending marketplace, which is a San Francisco based lender, believes that there are two things which are leading to growth of peer to peer lending. One is that this lending is an alternative to traditional bank-based lending. When consumers do not solve their problems in the banks, they have to look elsewhere and this is where they get the services they have not received from banks and other traditional institutions.
Conventional banks are not easy to deal with and most consumers find it very discouraging to deal with banks when it comes to borrowing. This is why when presented with a less rigid lending platform; consumers are willing to borrow from person to person lending companies. On the side of lending, there is more access of a credit asset class in the personal loans something that has previously not been there.
People are able to obtain their loans online and the process is easy though with strict measures. The borrowers understand that they are not taking funds from an institution but the resources of individuals pulled together. The average loan at Prosper is placed at $8,500 and this has produced good returns to the investors since the inception of the company in 2006.
With the growing consumer asset class, it means that this credit sector is stretching its arms and within a few years, peer to peer lending has become a billion dollar industry.
Peer to peer lending is a unique financial platform, which offers both the investor and borrower an opportunity to benefit from the business model. People who need quick money can get loans of up to thousands of dollars.
These loans are unsecured and they are granted to consumers provided that you meet credit requirement and other risk check parameters. On the other hand, the investors who are seeking for ways to diversify their investment portfolio find it quite convenient to invest in peer to peer lending by putting up money to fund one or more loans. This is a unique setting of lending and you cannot get it anywhere like in banks.
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