What is financing for people? Let's find out? Today's technology brings new energy to the old ways of borrowing on a fully digital level, especially the availability of peer-to-peer loans to all people who have access to the computer network, even with a cell phone. For centuries, we have been borrowing the traditional banking system formalized in person and filled with paperwork in the transactions, but now everything has changed.
What is funding for people and between people
Today the lending community, private groups, immigrant populations, ethnic communities and commercial groups have long operated their own lending networks among members.
The peer-to-peer loan has found a middle ground and uses the technologies of today to bring the philosophy of finance to people and between people similar to these groups mentioned in the first line of the paragraph. But everything done over the internet.
How Financing Works for People
Financing for people and between people, also known as collective loan, is quite simple, although the details may vary slightly between the different platforms that offer this service. A potential borrower prepares a request for what he needs and why. Your credit history, your income and other relevant information are subject to the intermediary platform and facilitator of the financing, to be clearer, is the provider that acts as an intermediary for future borrowers and investors lenders to process the financial transaction.
The loan application is posted on the website (online platform) or an online Android or iOS application, along with the data necessary for lenders within the platform to make a decision. Potential lenders navigate through loan applications (peer to peer loan) and choose to take out the loan or not. There is a process similar to a bidding process, in which lenders offer their money to lend at a specific interest rate.
A single lender (investor) need not invest their money in a single loan. The normal thing is that the platforms will allow a lender to provide only a fraction of the loan requested, so the entire loan amount is split so that several lenders invest in it.
What is the term of the peer to peer financing
These people loans are usually short term or very short term loans, with some providers setting a limit of up to 12 months, some up to 36 months for repayment, but of course each platform has its own guidelines.
The provider (P2P platform) earns a fee to process the transactions and other tasks involved in running the system, the lenders (investors) earn interest on the money they lent, and the borrower gets the loan that he can not get in other channels.
People's interest rates are slightly cheaper than traditional loans for some borrowers with a good credit profile, but for those with a name restriction (with a dirty name) there is no impediment in getting the desired credit, but the rates are not as salty as in the usual financials.
Interpersonal Loans Back in People's Hands
We all know that traditional lenders are absolutely impersonal, running strictly numeric commands. In the non-peer-to-peer loan , it allows a borrower to submit a more personal request, and lenders can make their decisions based on the details that this borrower reported.
In this case the lenders have the ability to spread the risk, and this may mean that they are willing to give a chance to lend the amount where other types of lenders have not lent. In addition, traditional lenders generally do not deal with smaller amounts or at least not on the terms and conditions that P2P offers for its borrowers.
Peer to peer for micro, small business and entrepreneurs
Peer-to-peer financing is a great opportunity for people to overcome the limitations of the standard options available in the banking sector, fortunately the alternative has attracted considerably many stakeholders in ways of doing business that do not depend on large financial institutions, especially micro, and entrepreneurs.
The P2P lending loan financing seems to be a growing phenomenon, and for good reason. The modality is the mix of the best old money lending practices with today's most advanced technology (blockchain) to create financing opportunities between individuals and companies as well. And everything under intelligent control of digital tools.