What are social loans?
Peer to peer loans, otherwise known as social loans, are a relatively recent form of borrowing money. And while they may indeed have some benefits, they are also not without its disadvantages. What is worth knowing about social loans?
Peer to peer loans undoubtedly harness the power of the community. They rely on the fact that private individuals lend to private individuals. Of course, the loans bear interest. The person interested in the loan issues a request to receive it, specifying in detail the amount and purpose. On the other hand, capital owners decide whether a person wants to borrow money. This on the one hand allows the applicant to get a loan without creditworthiness, but on the other hand it can be difficult for the borrower to recover the amount borrowed. But is this really the case?
Social loans – are they popular ?
These types of loans actually started with the idea that people would borrow money from each other without banks. At present, however, most platforms offering social lending services withdrew from the market , as using social loans was associated with too much risk. There were situations when the money did not return to the owners and the brokers washed their hands. Therefore, the popularity of the so-called P2P is rather low and this type of loans are not very popular.
What are peer to peer loans?
The mechanism of action of the so-called social lending is not a very complicated matter. We can enlist them through various portals – they connect people who have no money for a given purpose with those who have free cash. Using the option of social loans you can take out a loan in the amount from 300 to even tens of thousands of dollars. The interest rate on such a loan is usually set individually between the lender and the borrower. It is worth knowing that there are no legal regulations that specify the maximum costs of such a loan, therefore the lender may set the interest rate at the level he deems appropriate.
To take out this type of loan, you must register on the portal that mediates P2P. When registering, we provide approximately the same data as when applying for an online loan. It is obvious that not everyone has a chance to make such a commitment. We gain additional opportunities when, for example, we agree to check our person in the debtors’ databases. A much safer option for the lender is to use the services of loan companies that we can easily contact and we are sure that our data will not be disseminated in any way. In addition, the lending companies are subject to the law, so they cannot exceed the maximum cost of the loan.
Is it worth investing your savings in social loans?
It is also worth answering the question whether it is really worth investing your free funds in social loans. Before you decide to deposit cash in this type of “business”, it is worth analyzing the idea carefully. We have to remember that it is about borrowing cash via the Internet, and here you should always be more careful. We have already written about how to feel safe online, so you should read these basic principles at the very beginning.