5 Benefits of Online Peer-to-peer Lending That You Didn't Know The documentation required is also simpler as compared to bank loans

From your gold to your grocery, you buy everything online. So why not lend online too? Isn't it strange that when it comes to lending money, we are still reliant on the traditional ways, although, for everything else, we have gone digital?

P2P is the new way of lending that makes borrowing simpler. Read on to know how.

No one enjoys the cumbersome task of filling numerous forms and providing a whole lot of documents and then the indefinite wait. Even after all this, you are not sure if the bank will approve the loan.

If you don't have a good credit score or your salary is lesser than their minimum limit, your loan won't be approved. Turning to friends and relatives' for a loan can be embarrassing.

Wouldn't it be great if you could avail a personal loan without the tiring formalities of the bank and the embarrassment of relatives? P2P platforms can help.

To give you a fair idea, P2P lending platforms, also known as peer to peer lending platforms are the intermediaries that connect the borrower to the lender.

Now, let's look at the reasons which make lending from online platforms better than any other method of lending.

Easier and Faster

In online lending, everything happens digitally. So, it takes lesser time. Your loan can be approved in just 72 hours in a lot of cases. The documentation required is also simpler as compared to bank loans.

Generally, you would be asked to provide your identification documents, salary slips, and bank statement. You have to submit these documents digitally. And you are ready to go. Now you can interact with the lenders on the platform to get your loan. It won't take you more than 5 minutes to register on these platforms. Just keep your documents handy.

Lower Eligibility Criteria

Getting your loan approved from the online lending platforms is much more comfortable than getting it approved by the bank. Banks have many eligibility criteria that a person must fulfill to get loan approval. For people working at lower salary brackets, it is even tougher to get loan approval. Moreover, if your credit score isn't high you can forget about getting a loan from the bank.

Same is not the case with online lending. You can get a loan even if your credit score is not that good. People, who earn salaries as low as INR 15000 a month, can get loan approval from many online lending platforms. Moreover, for the first time borrowers, instead of credit score, social verification is used. You can connect your social media profiles to your account on the lending platform. The lending platform will use your social network and other personal, occupational and financial information to gauge your credibility. Thus, you can easily be eligible for getting a loan from an online lending platform.

Lower Interest charges

Banks charge huge interest rates on personal loans as these are unsecured loans. But with online lending, you often get competitive interest rates. Many lenders bid for your loan which makes it possible for you to get the loan at a lower interest rate.

Now repaying the loan won't burn a hole in your pocket. You wouldn't have to sacrifice your lifestyle to be able to pay steep interest rates.

No hidden fees and charges

Have you ever tried to get a loan from a bank? If yes, then you would know that once the process starts, you have to pay some fees and charges. There are so many hidden charges that you are just not aware of in the beginning. But as the process starts, a new type of fee or charge is waiting for you to shell out money every other day.

With online lending, this is not the case. There are no hidden charges or fees. The platform clearly states the registration fee and the commission on the loan at the beginning of your registration.

Apart from that, you don't have to pay even a single penny to the platform for getting your loan. Now you can actually use your loan money to fulfill your requirement rather than wasting it on useless fees and charges.

No penalty for repaying your loan before stipulated time

You got a handsome amount of money from the shares you sold. Now you are thinking of repaying that personal loan that you had taken from the bank. But the bank is asking you to pay a pre-payment or pre closure penalty. They are basically asking you to pay a hefty fine because you are giving them their money back before the maturity period of the loan.

This should have been a good thing, but apparently, it is penalized. But, not with online lending platforms. Now you can easily get rid of your loan before the tenure without paying any hefty penalty. Most of the online lending platforms charge only nominal prepayment penalty.

With so many benefits, why wouldn't a person opt for online lending? It is easy, it is fast, and it is cheaper. What are you waiting for? It is time to go digital with your lending as well.