Marketplace lending has contributed to the FinTech revolution since like other elements of the FinTech, Marketplace lending utilizes technology. It’s specifically geared toward the 21st-century’s financial needs. Recently, the popularity of Marketplace lending has soared, but that doesn’t mean personal bank loans are obsolete.
Definition of MarketPlace Lending
MarketPlace lending is a term that describes all forms of peer-to-peer lending on different platforms. In fact, the term peer-to-peer and marketplace lending are basically synonymous with one another. Marketplace lending connects borrowers with lenders via technology. With this form of borrowing, banks and borrowers are able to connect through marketplace lending sites. Users have access to loans fast. Accessing all loan information using technology is a convenient solution. It’s possible to save money using this form of lending since marketplace lending eliminates the middleman.
Typically, an unsecured loan costs more. The additional expense is to compensate in case you don’t repay. The process of peer-to-peer lending means you have access to more lenders who may offer competitive rates to secure your business. With this form of lending, the need to file paperwork, run a credit check or complete an application is eliminated due to a more sophisticated process. The cost of the application process and credit check drives the cost up when you obtain a personal loan through a traditional lender. Due to the intricate process used to determine your eligibility to repay, peer-to-peer networks have less delinquencies and repayment issues, meaning prices can remain low. Marketplace loan sites aren’t regulated by the government the way a bank is, so there is a potentially more risk to these loans; however, government interference is another reason for the expense of traditional bank loans.
Personal loans aren’t always cheaper. If you’re able to use a home or other asset as collateral, a bank may be able to offer you a line of secured credit at a lower rate. You could lose your home if you’re unable to repay the loan for any reason, though. Sometimes, your bank may offer loyalty intensives or other perks that make a bank loan cheaper. The process isn’t always lengthy either. Depending on your credit history, time spent at your bank and the bank itself, you could have a decision in as little 15 minutes. Typically, you’re able to receive the funds quickly. The amount of a personal bank loan is often similar to that of a marketplace loan. You’ll have to undergo a more extensive process, but if you’re leery because of the possible risk of a peer-to-peer loan, a personal bank loan may be the best course of action for you.
Although there are pros and cons to assess when considering the type of loan you want, you have to take into consideration your personal situation. Marketplace loans are better suited for many but not all. It’s always best to get quotes when comparing personal loans vs marketplace loans.
If you are in the need of a personal loan you can take a quick look at some of our approved partners on this page – Consumer Finance