P2P Lending - Cosumer and Investor Prespective

P2P lending, or peer-to-peer lending, is a type of lending where borrowers are matched directly with investors through an online platform. P2P lending platforms typically act as intermediaries, facilitating the loan transactions and handling the administrative tasks of loan origination, servicing, and collections.

Here's how P2P lending works:

1. Borrowers apply for a loan through an online platform and provide information about their creditworthiness and the purpose of the loan.

2. The platform uses an algorithm to evaluate the borrower's creditworthiness and assign a credit score.

3. Investors can then browse loan listings on the platform and choose to invest in individual loans that meet their criteria.

4. Once a loan is fully funded, the borrower receives the loan and begins making payments to the platform, which then distributes the payments to the investors.

5. The platform earns revenue by charging fees to both borrowers and investors.

Some key players in the global P2P lending market include:

1. Prosper - A US-based P2P lending platform that offers personal loans for debt consolidation, home improvement, and other purposes.

2. Zopa - A UK-based P2P lending platform that offers personal loans and auto loans.

3. Funding Circle - A UK-based P2P lending platform that focuses on small business loans.

4. Upstart - A US-based P2P lending platform that uses machine learning algorithms to evaluate borrower creditworthiness.

5. Mintos - A Latvia-based P2P lending platform that offers loans from multiple loan originators in various countries. 

   Some of Key Pros and Cons for Investors

   • Access to a diversified portfolio of loans 
   • Potential for high returns
   • Ability to invest in fractional notes
   • Machine learning algorithms for creditworthiness evaluation
   • Diverse range of loans available 
   • User-friendly platform
     
   • High servicing fees
   • Default risk 
   • Limited liquidity
   • Some loans may have high default rates 
   • Currency risk 
   • Platform fees 

   Some of Key Pros and Cons for Consumers

   Quick and easy loan application process Potentially lower interest rates than traditional lenders Ability to consolidate debt Loans available for small businesses Flexible repayment terms Higher interest rates than  Origination fees  Late payment fees