Understanding More About Peer to Peer Lending

Over the last few years, the lending environment has changed drastically. Traditional financial institutions are limiting the amount of money they lend. In combination with this, they also tightened their lending requirements. This made it more difficult for both individuals and businesses to secure the needed financing. There are multiple alternative options now available (Modest Money has covered most of them). We want to help you on the road to understanding more about peer to peer lending.

What is Peer to Peer Lending?

Peer to peer lending is also referred to as P2PL. It is the option of receiving funds without going through a traditional financial institution. You receive the fund from “peers” or people that not related to you at all. You also will find this practice referred to as “crowdfunding” or “crowdlending”.

Types of Loans

This type of loan is unsecured. This means that you do not put up collateral to receive the loan. They are made to individual people. The most widely known area here is crowdlending where you post the amount of money you need and the purpose then individuals either bid on the loan or offer part of the loan amount.

How the Internet Has Changed the Way We Invest Our Money

Investment used to be an old fashioned thing. You put your money into either a business venture or the stock market or bought bonds from the government. There were a few basic options for how you invest your money and what you would usually get as a return back.

No matter what way it happens or the type of venture gone on, an investment has always traditionally been the process of putting out a certain amount of credit or cash into something with the expectation that there will be a return on the money.

Before you ask, no, going to the races and placing bets on race horses isn’t a real type of investment. So what’s going on in the world of cash and finance now that the world wide web has arrived? Things have certainly altered a bit since the eighties and an entire world was without digital wi-fi connection.