Banks acts as an intermediary between those who are seeking funds and those who can provide funds to each other. But this intermediation comes with a cost as banks with their burgeoning branch network have huge operating expenses.To cover their operating costs, banks make a significant spread providing a saving rate of 4% to 6% on their saving account and charging 14% to 24% on different type of loans.
Moreover, over the period of time banks have adopted stringent lending policies which are quite rigid in nature. This rigidness has resulted in a large number of borrowers being discarded by banking industry. Whereas new age lenders like P2P lending India platforms have much lower operating costs and sophisticated credit assessment models to provide loans to large population of eligible borrowers. Let us see why you should borrow money from peer to peer lending platforms –
- New age lending philosophy – P2P lenders have built a cutting edge lending technology to provide loans to vast population of borrowers which do not meet rigid lending policies of banks. They just don’t look into existing repayment track record of the borrower but also considers future repayment potential of the customer.
- Less dependence on Credit/CIBIL Score – CIBIL is one of the most dreaded 5 letter word among the borrower’s community. The reason for this fear among them is that banks have a minimum CIBIL criteria of having a score of at least 750. If the borrowers don’t fulfill this criteria than banks don’t provide financing to the borrowers.
- Lower interest Rates – For a personal loan from a bank, you may have to shell rate of interest of around 18%. But through P2P lending India it is not strange to find lenders of who can provide funding at rate of interest around 12% to 16% depending on your profile.
- Ease of Process – P2P lenders follows a process that is technology driven and it is quite easier compared to application in banks. Your process would be streamlined and transparent to you from application status to final disbursal.
- Better Deal Terms – You can get a better amount compared to other lenders. There are high chances of getting a deal that is also better in terms of tenure and interest rates.
P2P lending India investors are changing the lending industry. They are changing the way in which lending is done. It is a win-win situation for both lenders and borrowers. With new upcoming guidelines from RBI expected in next few months, you can expect this industry to grow exponentially in near term.