Let us understand first about the P2P personal loan. P2P personal loan stands for peer to peer personal loan. This is a method of borrowing money but it does not require any kind of traditional methods. In this kind of loan, you don’t need to go to the bank. You simply borrow some money from any person at some rate of interest.
If a person is having access to money then they also give it to people at some rates of interest without more worrying about the credit score of the borrower. Sometimes if you are struggling with a bad credit score and you need money urgently then you can go for a P2P loan. The P2P loan is simply a loan between the investor and the individual.
There are some features or you may say there are some advantages of P2P loans. Let us discuss them one by one.
1.Low Cost: One advantage of the P2P loan is that they have less rate of interest. If the lender is familiar to you and he knows your ability to return the loan amount. Then he may do some negotiation in the interest rate. Besides that the processing fee in the P2P personal loan is quite low as compared to personal loan provided by a bank or any other financial company.
2.Quick: One more advantage of a P2P loan is that it is quickly disbursed. If the lender is satisfied with your capability to return the loan, then he will provide you the money at that time instantly without any hesitation. There is no tedious documentation is this kind of personal loan.
3.Credit Score: It is not the credit score only that matters in the P2P personal loan. Sometimes it matters a little bit. Your credit score should be more than 600 at least because some lenders see your credit history as well.
Types of P2P personal Loan:
The P2P personal loan can be of two types.
Firstly in a P2P personal loan, there is a requirement of collateral. They sign an agreement or collateral is requires security.
In the other type of P2P personal loan, there is no need for collateral even. Some so many online lenders provide you a P2P personal loan. In this, you will get your money electronically and you return your money in the electronic form as well. Generally, the tenure of these loans is 3 to 5 years. Besides that, you may prepay without any penalty charges.
The only disadvantage of this P2P personal loan is that there is a slight probability of risk. There are a few more chances of fraud. But to keep yourself safe from these frauds you are advised to research your lender properly and pay any kind of EMI and interest rates only after getting the amount of loan.
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