What is P2PL?

Peer-to-peer lending (P2PL) involves lending or borrowing money without using the more traditional route through a bank. These are normally unsecured, personal loans. The aim of this practice is to provide lenders with a good return for the money they provide. For the lender, it is an investment. The borrower can achieve a lower rate of interest. This is all largely possible because such lending can be arranged on the internet using a finance company as an intermediary thereby reducing banking overheads. There are many respectable companies that can facilitate this. For investors P2PL offers a good return with less volatility and liquidity than some other investment types.
In essence, P2PL aims to connect those individuals with money to lend to those who wish to borrow. In addition, it enables some individuals to obtain loans for which they may not meet the bank’s criteria. This type of lending is not a minor activity involving a few wealthy individuals. It is now widely used e.g. student loans, real estate and pay-day loans are widespread forms of P2PL.
P2PL was first established in the UK in 2005. Since that time it has become increasingly used in the USA and elsewhere. It offers an effective investment and, not surprisingly, now attracts many large financial institutions.