P2P Lending and Bank Loans

Outlook Money

P2P lending enables borrowers to get loans from individual lenders themselves, without banks or NBFCs intervening, through online intermediary platforms.

Where Does the Money Come From

Banks borrow money by lending money from the public. In P2P lending, money is lent from private individuals who want to earn interest by lending money directly to borrowers.

Loan Approval Time

Banks demand rigorous credit checking and take weeks to endorse. P2P sites use unconventional data and provide faster endorsements.

Borrowing Expenses And Interest

P2P levels are negotiable and potentially differential based on risk level. Bank loan interest rates are market-referenced and credit-referenced on borrowers.

Collateral Required

Banks typically require collateral for most loans. P2P loans are unsecured, thus accessible but also riskier and more costly.

Consumer Protection And Regulations

Banks are regulated by RBI. Although P2P platforms fall under RBI regulation, advanced consumer protection rules are yet to be developed.

Compiled by Priyanka Debnath

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