If you are looking for a loan or an investment opportunity you have probably considered a bank or credit union as your first choice. As other companies and opportunities become available in the world of finance, both borrowers and investors explore other companies to meet financial goals. Peer-to-peer lending is still a relatively new concept in terms of borrowing and investing and many consumers voice concerns about the legitimacy of this process. Companies like Prosper.com and Lending Club are often put in the spot light with the main question being, is this some sort of scam?
Anytime money is involved, consumers must consider whether or not the company with which they are dealing is legitimate. There have been many questions asked about Prosper.com and Lending Club, both companies that provide peer-to-peer lending. To better understand this process, consumers are urged to research both the benefits and drawbacks before moving forward.
Investors interested in peer-to-peer lending opportunities discovered certain flaws in the system in the early years. When the credit requirements were less strict, the risk of default was much higher. Early investors in Prosper.com might have been better off choosing another investment vehicle, however that does not appear to be the case today. Neither company is considered a scam however, as with all investments, there is a certain degree of risk.
Borrowers have fewer concerns as compared to investors, however there are still issues that should be considered. Interest rates may be higher for borrowers with less than perfect credit, however in most cases, personal loans through Prosper.com or Lending Club are better than those offered through a bank or credit union. On the other hand, investors can see a better return on their investment as the interest rate on their end is often higher than that of other investments offering similar risk.
To learn more about this process and the individual companies involved, a simple search on the Internet can turn up useful information. Past consumer complaints or problems can provide potential users with an insight as to what may be a problem in the future. Companies are also rated by the Better Business Bureau which is a good indication of past and future performance. Consumers are urged to find out as much as possible through these and other sources to ensure they are making an informed decision regarding borrowing or investment opportunities.