These days, you no longer have to approach a High Street bank to save or borrow money.
Now, peer to peer loan companies are springing up, letting people borrow from and lend money to other individuals.
But, how do so-called ‘p2p loans’ work? What are the benefits? And how can you compare social lending websites? We explain.
What are p2p loans?
Instead of borrowing money from a bank or building society, p2p loans involve you borrowing cash from another individual.
You can also benefit from higher returns by lending your cash through p2p loans rather than leaving them in low paying savings accounts.
The interest rate that you will receive on the best person to person loans will vary depending on your profile, your borrowing requirements and your credit history. Generally speaking, the higher the loan risk, the higher the interest rate.
Benefits of the top peer to peer loans
There are several benefits to lending or borrowing money through a social lending website.
If you’re borrowing money you can sometimes benefit from a lower interest rate than you would get through a High Street bank or building society.
And, if you have a less than perfect credit record you may still find someone prepared to lend to you, albeit at a higher interest rate.
If you’re looking to lend money then you’ll generally get a better return from the best person to person loans than you will from a traditional building society savings account. However, you will benefit from lower protection than you’d enjoy with a savings account.
How do I find the best person to person loans?
There are several websites that now arrange person to person loans. You can use our p2p loan comparison to find the best social lending site for your circumstances.
Remember to compare social lending websites based on criteria such as:
Minimum and maximum loan amounts
- Minimum and maximum loan terms
- Representative interest rates
- Whether you will receive a lending decision online
- The rate of interest you will be charged
Take all of these factors into consideration and you should be able to find the social lending site that gives you access to affordable borrowing.