What is "peer-to-peer lending"?
Peer-to-peer lending and borrowing has been around for over 10 years in the UK. Classically individuals (or businesses) would save their money in a bank, and the bank would then lend that money to other individuals or businesses. P2P removes the bank from this process. There are a growing number of online companies that can facilitate this process. This process has also be referred to as social lending, crowdlending and marketplace lending.
What advantages are there as a lender?
Lenders can obtain higher rates than they can with a bank or building society. On some sites lenders are able to set their interest rates. From the lenders' perspective this process is quite different from simply opening a savings account.
What advantages are there as a borrower?
Borrowers could obtain lower rates than from other loan providers, and they also have the knowledge that they are borrowing money from individuals like themselves. From the borrowers' perspective the process is not too dissimilar from dealing with a bank or building society.
Is my money safe?
This question is always asked by people new to P2P. Peer-to-peer lending is not covered by the Financial Services Compensation Scheme and your capital is at risk. However P2P compare the different aspects of peer-to-peer lending, so you can make and informed decision if P2P lending is for you.
Where can I search for information?
You can use the peer-to-peer search engine which will look for information within the peer-to-peer arena.