A peer-to-peer loan: what does that mean?
Instead of borrowing money from a bank or another major credit company, it is also possible to take out a peer-to-peer loan or a P2P loan. You can read what this loan entails and how you can take out a peer-to-peer loan in this article.
The peer-to-peer loan: a short introduction
The peer-to-peer loan is a loan that you take out with another private individual. So you do not go to a company to take out a loan, but you are looking for a private individual who wants to borrow money and also has the capacity to provide the requested amount in the form of a private loan.
Now you may be wondering why other people you don’t know would want to borrow you money, but this is simply due to the interest of a peer-to-peer loan. Just like with the bank, you pay a fixed amount of interest to the private individual who lends you money. And because the interest on a loan is often higher than the interest on a savings account, some people prefer to lend out their money rather than leave it on the savings account.
Taking out a peer-to-peer loan
There are various websites that offer P2P loans and give you the option to take out a loan online. A major advantage of using a website is that this website controls the loan that is taken out. In this way, the loan is properly concluded with a good contract and both parties cannot get into trouble later due to a loan without a contract or a loan with a bad contract. Searching for a private person to borrow money from using a forum is not recommended.
In this case, it is more likely that you take out a loan without a contract or with a bad contract and that you will have problems with this later. If you take out a loan without a (good) contract, for example, there is a chance that the lender suddenly raises the interest considerably and that the loan suddenly becomes much more expensive. If you take out a peer-to-peer loan through a specialized website, you do not run this risk and you can safely borrow money.