Peer-to-peer (P2P) lending:

also known as marketplace lending, is a lending model that harnesses online platforms to directly connect lenders and borrowers, eliminating the need for traditional financial intermediaries like banks.

Within the realm of P2P lending, individuals or businesses in need of loans can create loan listings on P2P platforms to request funding. Meanwhile, individual investors or institutional lenders have the opportunity to review these listings and decide whether to provide funding based on their risk tolerance and expected returns.

P2P lending platforms act as intermediaries, facilitating various processes, including loan applications, credit assessments, and loan management. They leverage technology to enhance the overall user experience and match lenders with borrowers. The loans themselves can be utilized for diverse purposes, such as consolidating debts, obtaining small business financing, covering educational expenses, or securing personal loans.

It's essential to note that P2P lending platforms operate under the legal framework of the country where they are based. These platforms must adhere to relevant laws and regulations, especially those designed to protect both borrowers and investors, which can vary from one jurisdiction to another.

How to earn passive income with peer-to-peer lending?

let's discuss it in part 2.🙂