We have all gone through complicated financial moments: after the famous January slope, when a family emergency occurs, at the beginning of the school year, in short, countless reasons why our portfolio is empty. On these occasions, when you most need a “help” insurance, the first thing you think about is a loan or using a credit card. We share this video in which we explain the differences.
Personal credit or credit card?
Personal credit or credit card? Stay and Paulina will tell you what you should take into account to know what is best for you.
Posted by Solve Your Debt on Friday, June 8, 2018
If you are interested in acquiring a personal loan but you still have doubts, in this article we will share the 4 things you need to know about loans between individuals.
Where did these types of private lenders come from?
This model was born with two companies, one of them British and the other American during 2006 and 2007 and managed to transcend quickly thanks to the effectiveness of the model and the benefits that it could bring to all users, both accredited and private lenders.
Now in Mexico there are several options that can give you the advantages of requesting a quick loan in a P2P or investing money. One of them is La Tasa, which can offer up to an annual return up to twice as much as if you buy CETES and for the accredited, the opportunity to achieve their purposes with the help of a loan.
But what roll with the peer-to-peer model or loans between individuals (people who lend money, then)?
According to the site of Investopedia, the P2P loan or peer-to-peer loan is a method that allows two people to request a loan and invest money without the need to have a financial institution as an intermediary.
P2P seeks to link accredited with private lenders without a bank being involved. We can imagine the following case: Laura wants to invest her money and generate better interests than those offered by the bank. On the other hand, we have Pedro, who needs to ask for a loan but has not had such good experiences with financial institutions.
Laura, by becoming a private lender, with her investment will help Pedro get a portion of his loan and with the interest he pays, so she will get excellent returns.
Sounds like a win-win, don’t you think?
And what advantages do P2P loans have?
Loans are authorized faster
Bank processes tend to be longer than a company that manages a P2P model, so you can have liquidity in less time.
Security of your money
For borrowers and investors alike, loans between individuals have security measures for both the personal data of their customers and their money.
Accessible interest rates
According to Best Bank in 2017 the basic credit cards had an interest rate of around 49.5% imagine, you would be paying almost half of what you asked for in pure interest!
On the other hand, the interest rates they calculate for loans can become much more accessible.
And what do I get as proof? Someone explain me!
The platforms that currently use the P2P model or loans between individuals, are companies that have cutting-edge technology that will provide you with the necessary tools to follow up on your case and not have to wait for the mailman every month with your statement.
Remember that you can also invest your money.
If you are a person who does not need to apply for a loan and are really looking for how to put your money to work, then this model is for you. You provide a certain amount for which you will be receiving returns on the interests that the borrowers contribute.
What happens if the person to whom I lent my money stops paying?
These models of private lenders are designed so that you can diversify your investment and that it is not at risk. Although all investments carry a risk (you can read more in our article types of investments) having your investment segmented in small parts helps you, if one of those parties has a high risk of not paying, the others manage to balance it with the interests that generate.
In addition, so that private lenders do not take greater risks, the evaluation of candidates is quite select. Although they are loans without collateral, the accredited go through a selection process where the company ensures that it is “good pay.”
So you know, if you want a fast loan or want better returns, loans between individuals or peer-to-peer can be an excellent option.