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Published on November 9th, 2015 | by Pete

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P2P lending: Bring new advantages to unsecured loans

The dream for us all is to live life debt free; devoid of any obligations that come with being in the red. But the reality for many of us – facing some of the most extortionate costs of living of any generation to date – is that debt is often a necessity during the course of our lifetimes. But it also need not be the gory, drain on our lifestyles that some perhaps make it out to be.

Indeed, beyond automatic fixtures like mortgages and student loans, unsecured loans offer a means to do wonderful things like improve your home, go on a dream holiday, finance a new car, or make that career change you always dreamed of. In fact, they can even provide a means to improve your net asset value by consolidating other debts like credit cards and overdrafts.

That’s because, contrary to the image painted by less scrupulous lenders offering sky-high APRs, there are a myriad of good-value options in what has become an immensely consumer-friendly unsecured loans market.

Diversity as a means to value

The fact that Bank of England rates have bottomed out at 0.5% has certainly helped create a favourable climate for borrowing. But perhaps a more significant element is the increased diversity and competition among lenders, with the growing presence of alternative finance leaving the biggest footprint of all. Chief among this are peer-to-peer lending (P2P) platforms, which facilitate the online matching of funds from consumers willing to lend their money directly with those in need of a loan.

The platform acts as a mediator, ensuring that proper controls are in place and that the necessary credit checks are done on loan applicants to ensure creditworthiness. However, none of these procedures disrupt what is ultimately a fluid process, and this highly streamlined business model generates value for both lender and borrower through sheer efficiency. The lender enjoys returns on their money of up to 6 per cent, while the borrower repays the loan at an APR typically in and around this figure – depending on their credit score.

P2P loans also offer non-monetary benefits like simplicity, convenience and improved flexibility. It takes just a couple of minutes to get a personalised loan quote and complete the subsequent online form, and, if approved, the funds for the loan will be in the applicant’s account within two working days from the time of initial application.

Applicants also have the freedom to borrow any amount up to £25,000, and to choose the length of time in which to pay it off (1-5 years). And, should you find yourself in such a position, some peer-to-peer platforms like Lending Works even permit you to make early repayments at no extra cost.

Leading by example

Best of all, it all takes place entirely online, albeit that there are dedicated customer support teams on hand to ensure a smooth and painless process for all involved. And by delivering such a high-quality product, an additional plus is that it raises the bar for its competitors, all of which contributes to creating an improved landscape for those who need to borrow money.

And as a result, unsecured loans are no longer simply a bailout, or a means for some sort of bridging finance. The good value they now offer represents a dynamic means to hasten doing the things we always wanted to do, or to make positive changes in our lives – without being left with repayments which cost an arm and a leg.

So if a loan is something you’re considering getting your hands on, the time to start exploring and doing your research is now. Because it has never been easier to hunt around and find the best possible deal that works for you.

 

 

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