The Theme and Benefits of P2P lending.

P2P lending is a form of financial innovation but the concept that works behind it is the same as in the case of the banking system. In P2P lending, a lender lends money to a borrower but there is no organized financial institution, such as a bank, involved.

1. Any lay investor or lender can lend money to any borrower who is registered with the P2P platform. The borrowers and investors both are registered.
2. Borrowers and lenders enter into a contract according to which they agree to the amount disbursed and the rate of interest. P2P lending platforms facilitate the transaction but are not directly responsible for any default or discrepancy, subject to the terms and conditions agreed upon by the respective P2P platform with the parties involved

Benefits:

• There’s a charitable aspect to the lending. If a potential borrower has a dodgy financial history but a sympathetic story to tell, a lender can willingly choose to forgo a higher return and/or assume greater risk to fund the loan.
• There can be a true sense of community at a P2P lender site. Forums tend to be active, and information is eagerly exchanged about lending and borrowing experiences.

Lenders can enjoy returns that are several percentage points above those for a bank; borrowers enjoy similar cost advantages compared with rates at a bank or credit union.