Top 5 Reasons to Invest With Peer to Peer Lending

Peer to peer lending is an exciting new phenomenon. For the first time lenders can efficiently find borrowers that are looking for personal loans without having to go to a bank. This efficient process benefits the borrower by giving them an additional way to secure a personal loan without having to meet strict bank restrictions. The lender benefits by being able to take on the role of the loan officer at the bank and deciding which loan they wish to fund, and being compensated with a higher interest rate for their effort.

The efficiency of P2P lending is what brings down the cost to the borrower and lender and allows both parties to benefit from lower interest rates than a bank can offer. These low interest rates make peer to peer lending attractive to borrowers. While at the same time appeal to people who are looking for a greater return on their investment than they can receive in their bank account.

Just like with any other transaction the fewer parties that are involved the more efficient the process becomes. The fewer amount of hands that need to see a return lower the cost of the transaction and benefit the parties that are still involved in the transaction. In this case people can see how both parties are equally benefited from the removal of the bank's part in the process.

Bank's will continue to dominate the personal loan market. However, as time moves on peer to peer lending will become a larger part of the personal loan market. As borrowers become more aware of ways to achieve a lower interest rate on a loan they will turn to p2p lending before they turn to the bank.

Investing with peer to peer lending is a fairly new concept, providing many benefits for the investor. This type of investing has become an alternative way to invest money because banks are no longer involved, giving the investor a better return on their money. Here are the top 5 reasons why someone would want to invest their money using peer to peer lending.

1. Knowing exactly where your money is being invested

Peer to peer lending, or p2p lending for short is gratifying because you are investing in other people. Your money is being used by other people who are trying to improve their lives, whether it is through getting out of debt, funding a business or using that money to improve their home. Each borrower has a story, and based on that story, you can choose a borrower that you can relate to or just want to help out.

2. Begin investing with just $25

If you have at least $25 to invest, then you can start investing in peer to peer lending. This is unlike many banks and mutual funds, where you have to invest hundreds or thousands of dollars to get started. With p2p lending, you can invest in lower increments of money, getting you an investment account a lot sooner.