Tag Archives: P2PLending

Why Are So Many People Defaulting on Online Loans?

Startups that provide peer-to-peer loans (P2P loans) through online services might be in serious trouble. Delinquencies and defaults on P2P loans are spiraling out of control. According to a recent article in Bloomberg, people are defaulting on these loans faster than expected. How does P2P lending work? At the simplest level, it would be like lending money to a friend or coworker, except that it would be a real loan instead of a favor. Startups using P2P lending magnify this process by connecting thousands of investors to borrowers who are looking for loans. Individuals or institutions can select specific loans to fund and make returns. Borrowers using P2P loans can be individuals or businesses. Depending on the company offering P2P lending services, borrowers go through credit checks, and receive some assistance paying back debts. There are some risks with P2P loans. Lenders do not perform the same types of credit…
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