Peer to Peer Loans

These are relatively new forms of personal finance, whereby you apply for a loan and then individual lenders offer you a loan and interest rates based on your risk profile.  It’s basically a marketplace, matching borrowers and lenders under a website platform.

The platforms are regulated as are other loan providers, so there is protection in place for borrowers that get into difficulty.  Collection processes are quite transparent, but if you do default then its inevitable that debt collectors will be appointed, and even your debt “sold off” at a fraction of its cost, which then incentivise the debt collector to be quite aggressive in their approach.

It is still early days for these new platforms and the industry as a whole, so it’s difficult to predict what the future holds, so caution needs to be maintained, however possibly no more so than with traditional debt lenders.