Crowdlending market size is projected to expand at a CAGR of 51.5 percent from 2016 to 2022, to reach approximately $460,312 million by 2022. Peer to peer lending or marketplace lending is driven by the surge in emerging markets due to an increase in greater investment transparency, knowledge of the marketplace, and lower interest rates to borrowers.
P2P lending market is one of the fastest-growing segments in the financial lending market. It is especially popular because it is an alternative means of lending money virtually. The core principle of the P2P lending sites is connecting directly borrowers with lenders through online medium.
P2P Lending Market Evolution
P2P lending marketplace is still in its growing phase, but it has already uncovered a whole new set of investment opportunities for all players. The growth of the crowdlending marketplace has made the next-gen investors shift from the traditional method of business to the more effective peer to peer lending platforms for offering loans.
The benefits of Crowdlending
Crowdlending offers a number of benefits over the traditional forms of borrowing. Here are some of the good reasons you should use crowdlending.
The online application is fast and convenient
Peer to peer platforms operates typically online, which means the application process may take just a few clicks. This can be very beneficial if you wanted to secure funds quickly. Most crowdlending sites have a waiting list of investors to offer loans to lenders, which when combined with the automated matching process, the turnaround time on lenders getting the loan can be very quick.
You may be able to haggle and get lower rates
Many P2P lending platforms offer loans with lower interest rates than they could obtain from other forms of lenders such as credit societies and banks. As lenders are providing loans directly to the borrowers via a peer to peer website, there are no usual overheads associated mostly with the traditional lenders, which enables both parties to access more favorable rates.
You can get a personalized quote that doesn’t impact your credit score
Crowdlending platforms can allow borrowers to get an initial quote without having to worry about their credit score. This allows the borrowers to get an idea of the rate they will be offered as well as the affordability of any potential loan.
When you request for a loan, most crowdlending platforms will only do a ‘soft search’ on your credit history, meaning it will unlikely show up in future searches by other platforms. This enables you to access the information you need without harming your credit score.
Best alternative loan provider to traditional lenders
Crowdlending is a great alternative option to traditional lenders such as credit societies and banks, for those borrowers seeking finances to meet their needs.
You only need to deal with crowdlending platform
Peer to peer loans is financed by individual investors or lenders, and not a single institution like banks. However, you don’t need to deal with these lenders directly as the platform ensures everything runs smoothly by acting as a middleman between the two parties. Both borrowers and lenders remain anonymous to one another.
Crowdlending loans are unsecured and more flexible than traditional banks
The unsecured loans from peer to peer means you don’t need to provide any collateral, therefore you won’t have to risk any personal asset by tying it up to the deal, like in many other forms of borrowing, thus allowing you to access loans in a shorter time possible.
P2P marketplace also offers much more flexible loans than other types of loans.
Risk diversification is possible
Peer to peer platforms allows you to spread your capital across numerous loans, enabling you to effectively manage your risk exposure.
Personal savings allowance
The interest rates you earn via crowdlending is now included in your “Personal Savings Allowance.”