Borrowing money from other individuals rather than from a bank is an exciting alternative for borrowers. Here you will find the relevant providers in direct comparison as well as a comprehensive guide that is aimed at borrowers and also at investors and lenders.
Advice on personal credit
Personal loans are also called peer-to-peer (P2P) loans and mean loans that you borrow not from a bank but from another individual. This can have many advantages, for example, the fees of the banks are eliminated so that the loans are cheaper for the borrower.
This guide wants to shed light on how this type of loan came about, where the advantages and disadvantages lie and what future developments can be expected in this area of credit.
At the same time, we want to look at this topic from an investor’s perspective, who provides the money for this type of loan.
Origin of loans from private for private
The entrepreneurial implementation of loans from private individuals to private individuals found the broad scope of their possibilities with the Internet. In 2005, the British company E-Bank started issuing peer-to-peer loans online.
The Prosper Marketplace was founded in the United States a year later. In 2007, Good Finance was the first marketplace for loans from private to private in Germany.
Private individuals do not invest their money in any investment, but in a precisely defined project from which they receive interest. Borrowers apply so to speak with their project, their wish, their dream on a platform where borrowers and private investors meet.
If investors want to invest in the project, borrowers will receive the corresponding loan. There are not so many providers on the German market for this. But these platforms offer many advantages. It is worth taking a closer look.
The idea of lending money from person to person is very, very old. The Chinese already made private money transfers 300 BC. The world has changed and so this business also disappeared at the end of the 19th century.
The first mover of peer-to-peer loans
While E-Bank in the UK and the USA Prosper Marketplace are still actively involved in the market for loans from private to private, Good Finance is now history. Here in Germany, other companies have long taken over the field of peer-to-peer loans.
Great growth is expected of the market. Already in 2010, it was estimated that in the future four percent of all loans granted will be loans brokered online in the private sector.