Outlook Money
Peer-to-peer loans are becoming popular alternatives to bank loans. RBI-regulated platforms connect borrowers directly with individual lenders who fund the loan.
In P2P lending, you borrow from individual investors, not banks. The platform only connects borrowers and lenders, and handles documentation and repayment.
Before you take a loan, look at your monthly income and expenses carefully. Try to keep your total EMIs within 40-50 per cent of your income to avoid financial stress.
Before you share any personal or financial details, check whether the P2P platform is registered with the RBI as an NBFC-P2P.
Defaulting on a loan can negatively affect your credit score, as P2P platforms report to credit bureaus such as Cibil, Experian and CRIF. In serious cases, recovery, or legal action may be taken.
P2P loan tenures usually range from 3-36 months. Choose a repayment period that matches your EMI repayment capacity and financial comfort.
A borrower can take up to Rs 10 lakh across P2P platforms, according to RBI rules. These loans are suitable for small and short-term needs.
Every loan application creates a hard inquiry on your credit report which can lower your credit score. Apply only when you actually need a loan.