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P2P borrowing vs. Bank loans? What is the Difference?

Although the banks have been the leaders in the Indian financial sector, the number of online P2P platform registrations is increasing at a prodigious rate. We Indians are the best at trailing the footsteps of our ancestors, even in the finance and investments and that is the reason, why people keep wondering how P2P borrowing is different from the bank loans. With the help of the cutting-edge technology, the investments, and loans are made easier in P2P lending solutions. However, asking why we should prefer p2p option over the loan from banks is before deciding, to be very cautious in terms of finance.

Is bank loan cheap against P2P loans?

In general, the banks offer loans at the interest rate of 11% to 15%. Interest may be an important element, but the loan processing charge, prepayment charges, file handling charges, repayment mode swap fees, etc., should be considered before making a decision. Adding up all these hidden fees may make the interest go up to 20% to 25%.

On the other hand, the P2P money lending platforms lend without any hidden charges and this factor makes them take the upper hand over the traditional banking sector.

P2P loan without a bank account

P2P loans are offered to people who have no bank account, unlike the bank loans. Although there are 1.25 billions of people living in India, many of them do not operate their bank account. By offering loans to the borrowers, who do not maintain their bank statement, P2P lending portals strive to flourish in India.
Lower fees

Read: Collaboration Between Banks and P2P Lending Platforms

While most of the credit companies in the market are associated with a high cost, the P2P loan lenders do not charge arms and legs. Unlike the banks, there are no middlemen in between the lenders and borrowers. Further, the online lending maintenance cost is pretty low. Therefore, their service is offered at a lower cost.

Global access

The P2P online money lenders can be accessed from any corner of the world, as these companies are managed through websites. Anybody who has an internet connection can register on the website, list their requirements and get a loan, from anywhere in India.

Minimum interest rate

The borrowers have the option to choose from different p2p lenders, who offer loans at different interest. Depending upon the borrower’s rating, the lenders reduce the interest rate. Further, the interest rate is fixed, making it easy for the borrowers to pay.

Credit score

All the registered banks consider the applicant’s credit score as the key factor for approving a loan. If the credit score is below 700, the chance of loan approval decreases. On the other hand, the p2p money lending websites facilitate loans, despite the bad credit. Instead of credit score, they take like social behaviour, cash flow, social behaviour, etc. into consideration.

Documentation process

Digitalized process removes the time consuming loan process. The leading p2p loan lenders like approve loan within a day’s time that you can have the money credited in the account, within 2-3 days of application.

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Monexo’s selection as one of the Top 20 FinTech Companies in Hong Kong

Between them, our panels looked over 500 FinTech companies in India and Hong Kong. And in terms of celebrating the innovation powerhouses across Asia, it was just a start.
So we’ll be launching a bigger, more comprehensive view in the shape of a brand new list later this year.

The FinTech50 Asia.
As the gateway to China, Hong Kong has some big investors in FinTech on its doorstep – Alibaba, Baidu, Tencent. Investment into VC backed FinTech companies in Asia hit $4.5bn in 2015, ahead of the $1.5bn invested in Europe.
Two members of our inaugural Hong Kong FinTech20 – both Grand Prize winners – visited the UK in 2015 and as a result have already established offices in London and secured deals with a global technology vendor and a tier-one asset management firm. One, Lattice, also made this year’s Hot Ten.

Monexo Innovations

Monexo Innovations is a P2P lending marketplace with a focus on transparency and convenience through best-in-class technology. Hong Kong is its first market and its first product is focused on property owners who can borrow against rental income.

Reference: FinTech50 2o16