Peer-To-Peer Lending (P2P)
 |
Definition of 'Peer-To-Peer Lending (P2P)'A method of debt financing that enables individuals to borrow and lend money - without the use of an official financial institution as an intermediary. Peer-to-peer lending removes the middleman from the process, but it also involves more time, effort and risk than the general brick-and-mortar lending scenarios.Also known as "social lending". |
 |
Investopedia explains 'Peer-To-Peer Lending (P2P)'The advantage to the lenders is that the loans generate income in the form of interest, which can often exceed the amount interest that can be earned by traditional means (such as from saving accounts and CDs). Plus P2P loans give borrowers access to financing that they may not have otherwise gotten approval for by standard financial intermediaries.The method is not without its disadvantages as the lender has very little assurance that the borrower, who traditional financial intermediaries may have rejected due to a high likelihood of defaults, will repay their loan. Furthermore, depending on the lending system employed, in order to compensate lenders for the risk that they are taking, the amount of interest charged for peer to peer loans may be higher than traditional prime loans. |
Related Definitions
Articles Of Interest
-
7 Unconventional Ways Businesses Can Borrow Money
Find out how your business can get the money it needs - even when the bank says "no". -
When Financial Crisis Strikes The Bank Of Mom And Dad
If you really want your kids to learn to be financially responsible adults, it's time to stop giving them money. -
Using Economic Capital To Determine Risk
Discover how banks and financial institutions use economic capital to enhance risk management. -
10 Bank-Breaking Money Myths
Just because a belief is common, doesn't mean that it's true. Here we separate fact from fiction. -
The Best Way To Borrow
There are many avenues from which to drum up funding. Find out the pros and cons of each. -
Getting A Loan Without Your Parents
Use the 5 "W"s to finance your dreams without banking on a second signature. -
Can't Get A Loan? Turn To Your Neighbor
Peer-to-peer lending can be an inexpensive way to gain access to credit when banks are restricting lending. -
Lending Clubs: Better Than Banks?
If you need to borrow money and your credit is making it tough, this new option may be just what you're looking for. -
Peer-To-Peer Lending Breaks Down Financial Borders
Banks are no longer the only option for a loan - the P2P lending system operates without them. -
Choosing The Winners In The Click-And-Mortar Game
E-tailing has changed the way consumers do nearly everything. Do you know how to pick the best retailer?
Free Annual Reports
