Peer-to-peer lending is a fast-growing industry. The volume of loans issued by P2P lenders now surpasses $1 trillion per year. Peer-to-peer lending platforms are aimed at people with bad credit. The interest rates on P2P loans range from 1% to 6%. Most platforms accept borrowers with low credit scores. There are many benefits to P2P financing Malaysia.
P2P lending has experienced explosive growth in recent years. As of mid-2017, the total amount of P2P loans in the United States was $32.8 billion, up from $21.6 billion in 2015. This rapid growth is largely due to the lower interest rates that P2P borrowers pay than their banks, and the higher interest rates that P2P investors enjoy. The virtual environment of the P2P lending platform encourages personal lending, resulting in better return for investors.
Many of the P2P platform Malaysia do not hold banking licenses, but rather use the Web Bank in Salt Lake City to sell pieces of the loan to investors. Investors are then matched with borrowers and evaluate the risk based on their own risk-evaluation criteria. P2P lending is a disintermediation of the banking system, as Wharton management professor Keith Weigelt describes it. He compares the concept to private lending practices in China.
Platforms offer loans to borrowers with poor credit scores
Getting a loan with a poor credit score is a daunting prospect, but there are many ways to improve your chances of being approved. Platforms such as P2P Credit make it easy to apply for personal loans even if you have a low credit score. While traditional banks often turn down loan applications from borrowers with less than a perfect score, peer-to-peer lending companies can help you secure a loan with a reasonable interest rate.
Peer-to-peer lending volume is eclipsing $1 trillion yearly
The growth of peer-to-peer lending has been incredibly fast. The volume of loans made through peer-to-peer networks is expected to surpass $1 trillion in the next five years. The concept of peer-to-peer lending is not only beneficial to investors, but also to borrowers, since it allows them to obtain loans with less friction and lower interest rates.
In China, the P2P lending industry is experiencing a wave of defaults, which has caused investors to withdraw their funds and cause some platforms to collapse. In June, the Chinese Banking Regulatory Commission tracked 1,778 P2P lending platforms. One of them, Ezubao, was found to be a Ponzi scheme, and it has been shut down. The fraudulent activities have affected the market and ruined the reputation of the industry.
The growth of peer-to-peer lending in China is attributed to several factors, including a large population and increasing awareness of the benefits of this alternative lending model. China is the largest market for P2P lending in the world, with outstanding loans of RMB1.3 trillion during the 2014-17 period. India’s population base and increasing number of potential borrowers will make the Asian-Pacific market a lucrative market.
The growing market for P2P lenders is largely driven by the need for small businesses. This segment of the finance market is growing at a rapid rate, and the Federal Reserve Bank of Cleveland reports quarterly growth of 80%. According to PWC, the US market for P2P lenders could reach $150 billion by 2025, while the European market for alternative lending is expected to grow by 144% from 2013 to 2014.
The industry has been segmented into two major categories: consumer and business lending. Within these categories, the companies are grouped by end users: consumers, small and large businesses, real estate lending, and others. Geographically, the market is categorized by region into North America, Latin America, and Middle East and Africa. This study aims to determine the reasons behind the disparate distribution of end-users in each of these sectors.