The way people invest and borrow money is changing; with the advances in technology, investment and funding opportunities are growing, bringing new options away from traditional banking.
For example, the number of opportunities for peer-to-peer lending in Ireland is growing, resulting in more and more lenders and borrowers choosing to invest and borrow more each day.
This new way of investment and borrowing is not only growing in Ireland, it’s taking the world by storm.
Understanding the Concept of P2P Lending
Peer-to-peer lending (P2P) is an alternative to taking out a loan. It is the process of directly lending and borrowing money between individuals without involving a third party which in most cases would be a traditional bank. An individual can choose to invest their money online and lend it to a borrower which can either be an individual or a business. In this process, lenders are essentially investing their money, as they will receive it back with interest added.
There are many online P2P investment platforms that offer services to facilitate this process, and each platform differs in the features they offer. The main role such a platform plays is connecting investors and borrowers. Through the platform, the lender also gathers information from the borrower regarding their financial situation and reason for borrowing, to enable them to make an informed decision regarding lending to the particular borrower. The platforms are integrated with the tools to assess the information provided and present lenders with an appropriate recommendation.
The Benefits of Peer-to-Peer Lending
P2P Lending is revolutionising the world of finance and adding a whole new alternative to money lending; one without the need to involve traditional banking. Although there are risks that can come with any financial investment, there are also many benefits.
For borrowers, this is a much more accessible and flexible method of borrowing money which gives them much more control. Peer-to-peer lending allows borrowers to take out a loan with smaller interest rates than what a bank loan would attract. This is especially beneficial for individuals who may not meet the criteria of traditional lending institutions. And it opens up more opportunities for individuals for instance to further their education, buy a house or even start a business.
Lenders also benefit from investing their money in this way. Instead of investing their money in a traditional savings account, lending it out can bring higher interest rates and result in higher returns on their investment. P2P lending platforms give lenders the power to choose their investments by deciding who to lend to.
Lenders are provided with detailed information that helps them make informed decisions. Lenders can also increase their returns and reduce the risk to their investments by diversifying the investments and splitting their funds in lending to multiple borrowers. P2P platforms are always improving their features to bring the best benefits to both lenders and borrowers.
With more and more opportunities coming up in the marketplace daily, both lenders and borrowers are taking advantage of the P2P lending facilities like never before, since it’s a win-win for both parties. It’s however, important to be aware of the risks in P2P lending. As with any investment, there is a possibility of default by borrowers, which could result in financial loss for investors.
Finding the Right P2P Platform
When finding the right P2P platform to work with, there are a few things to consider. A great way to begin is by looking at comparison sites which do the work for you and present all the information you need to know. This Esketit review is a great example of a service you can use, as Esketit is currently one of the most popular P2P lending platforms in Ireland.
In any case, here are some factors to consider when choosing a P2P lending platform. As you consider these factors, make sure you’re taking your particular needs and preferences into account.
Reputation and Credibility
A good way to verify the reputation and credibility of a P2P lending service is to read reviews online. Whether you’re a borrower or lender, be sure to check reviews from both sides, this way you’ll be gaining a full perspective. Check out how old the platform is – is it brand new? Does it have a solid track record of successful transactions?
Services and Features
A lot of platforms will offer attractive features, but some specialise in more specific aspects of P2P lending. For example, if you’re starting a business, there may be a service that caters more to that, or if you’re a lender and want to learn more about investing, there are platforms that focus more on the investment side.
As well as features, it’s also important to consider a platform’s security measures and procedures. There’s a lot of money on the line and therefore, you want to make sure things are as safe as possible. Make sure the platform you choose prioritises user safety and employs encryption technology to protect your personal and financial information.
As with anything with technology, there is a risk that sometimes things can go wrong, causing systems to go down. When or if this happens, you want to make sure that the platform of your choice is there to help you when you need it. A platform that doesn’t offer customer support in a timely manner may end up causing issues down the line, especially if there is a lot of money involved.
Along with customer care, it’s also a good idea to understand how a platform works before signing up to use it. Is the platform user-friendly? A platform with difficult navigation and unclear instructions can make your experience unpleasant and could even lead to misunderstandings and mistakes that otherwise could’ve been avoided.
Every lending platform will charge fees for using its services, whether you’re a lender or borrower. However, researching each platform before making a decision is a good way to ensure you’re not paying any more fees than you have to. This again may differ based on your situation, whether you’re a lender or a borrower, and will even be based on the terms of your loan and interest.
Take the time to research and compare different P2P platforms to find the one that best suits your needs, offers a secure environment and provides a positive user experience.
Changing the Landscape of Lending in Ireland
Peer-to-peer lending is still growing and making an impact in Ireland and all over the world. From the way things are going, the future of P2P lending is looking bright. In Ireland, while P2P lending is still relatively new, it has been growing in popularity. With the cost of living getting higher, there’s an increase in the demand for more accessible and affordable financing options.
Without having to involve traditional institutions, people can now borrow money directly from investors and pursue their dreams. Borrowers who previously were restricted in obtaining loans due to not meeting criteria one way or another, can now access the funds they need. This is giving individuals who have never before been given the opportunity to start their own ventures a chance in life. This is an extremely positive and exciting movement for society.
For lenders, while interest rates with traditional banks are still low, P2P lending is a way to earn more money with higher interest rates. Lenders are able to diversify their portfolios which could potentially lead to earning even more in returns.
You never know; with the increase in popularity of P2P lending, traditional institutions may see this as a competition and make positive changes in traditional banking and lending that will benefit society.
The future of P2P lending in Ireland has great potential to provide a viable sustainable alternative to traditional lending institutions and offer opportunities for both borrowers and investors.
As the industry continues to evolve and mature, it will be important for P2P lending platforms to maintain transparency, adhere to regulations, and effectively manage risks to ensure long-term success.
Overall, the new era of P2P lending for borrowers and investors offers greater flexibility, accessibility, and transparency. It is an exciting time for individuals looking to access capital or grow their investments, but again, it is always important to approach these opportunities with caution and careful consideration.