What Are The Advantages And Disadvantages of P2P Lending Apps?

We all know how to use a smartphone, whether it be food, taxi, online shopping, or anything else. We can handle any complex task easily by using various mobile applications available on the internet.

Nowadyas, looking for a personal loan is not rocket science. Instead of reaching out to a traditional bank, one can easily get a loan from multiple P2p lending apps available on the application market. 

However, being a new solution for financial needs, people are still unfamiliar with the pros and cons of P2p Lending Apps. For this reason, this blog will show some light on the advantages and disadvantages of P2P lending platforms development.

Before beginning with the pros and cons of these modern-day financial platforms. Let’s know about some in-depth basics of social lending.

What Are P2P Lending Platform Development?

Peer-to-peer lending is a financial solution that offers direct lending of a certain loan amount to individuals or businesses without any intermediate participation of an official financial institution. Due to some unique features, like quick money, P2p lending is famous as the best alternative source of traditional financing. P2P lending platform is a software to manage all things in a single place which is developed by our P2P lending platform development company.

There are various the best P2P lending platforms on the internet that provide direct loans by connecting money lenders with their potential buyers. 

Why do we need a P2P lending blockchain platform Development?

Social lending is quite famous among digital enthusiasts because of the many benefits that they offer. Still, this online loan term is jargon to many individuals. So let’s spill the beans, and figure out why we need to develop a P2P blockchain platform development.

1. 1. Medical situations: A medical crisis never comes with an appointment and a scalable bill. In such a medical emergency, one can get a personal loan from a P2P lending app.
      
   2. Travel loan: Sometimes traveling budgets may shake the whole expenditure of an entire month. In such a scenario, there are various online loan companies that provide travel loans on easy EMIs.
   3. Credit card loans: Sometimes, there come situations when we fail to pay the credit card bills on time. In such situations, a P2P lending blockchain app can work as a helpful hand.
   4. Home loan: There are various P2P lenders on the internet that provide instant home loans at the minimum interest rate and convenient EMIs.
   5. Mobile loan: Nowadays, every online website and various offline mobile stores provide quick mobile loans through these social lending platforms.
      
      >>>WhatsApp P2P Payment Beginning of this Time ?<<<
   6. Education loan: With the increase in digital accessibility, various e-learning portals are emerging that provide education loans for specific professional courses via P2P apps.
   7. Personal loan: Life is unpredictable, there are various things that happen to us without any prior notice. One can get a personal loan from any P2P platform to surpass such situations conveniently.
      
   8. Finance your start-up: India is advancing with evolutionary startups every year. You can also use any online loan app to finance your start-up venture.
   9. Debt management: Sometimes, managing existing loans is a very daunting task. You can use a Peer 2 Peer lending platform to balance your expenditure.
   10. Shopping: Are you planning to purchase an expensive product for this upcoming festival but unable to arrange finances? You can get an online loan from a social lending website.

Now we know What is P2p Lending Apps are and why we need to develop P2P lending platforms. Let’s dive in and figure out the advantages and disadvantages of social lending.

Advantages of P2P Lending Apps

 

Firstly, we’ll talk about the advantages that one can gain by taking a direct loan via Peer to Peer lending platform.

• Higher rate of returns: P2P lending is a great source of investment, these platforms offer higher returns on investment depending on the type of risk that is undertaken. Therefore, being an investor, it’s your duty to have all information about the borrower, loan agreement, and return on the loan that you’re providing.

• Highly accessible: This highlight is very beneficial for the borrowers, as Peer to Peer lending platforms are highly accessible than traditional loans from financial institutions. ‘Online Loan’ is all that you need to search on Google to access a social lending application.
• Lower interest rates: The competition of user acquisition is increasing exponentially day by day, companies are trying to attract customers by launching different types of Unique Selling Points. Similarly, to cope up with the competition, there are various P2P lenders that offer quick loans at a lower interest rate.

• No impact on credit score: This is another stand-alone feature of using a Peer to Peer lending application. These platforms offer direct loans without any risk of an effect on your credit scores.

• Quick loan approval: Coming to another highlight, social lending applications offer quick loans, these platforms work on the process of automation that integrates the waiting investors directly to their potential buyers. As a result, the loan approval gets quick and convenient.

 Disadvantages of P2P Lending Apps

However, P2P lending blockchain platforms sometimes cost an arm and a leg. So, here are some disadvantages that you must know before using a social lending app.

• Credit risk: It is one of the most negative factors for someone looking to invest in a P2P lending blockchain platform, the borrowers that apply for loans at such platforms usually possess low credit scores. 

Lower credit scores raise doubts over the loyalty of the borrower. Therefore, a lender must consider the loan default issue as a default counterpart in this business.

• No insurance policy: There is no insurance policy or any code of conduct by the government to secure the funds of a lender from any probability of default. 

• Pay tax for interest: Although, there is a huge probability of earning a good amount of return in Peer to Peer lending. However, according to the Indian jurisdiction, such platforms do not comply with the investment regulations.>>>Who Do I Call About a Tax Levy?<<<

Therefore, you will have to pay tax for the interest that you are earning from the borrower’s return and you’ll even have to show a declaration about it on the annual tax return.

• Arrangement fee: Whenever you apply for a loan in the bank, you need to pay a loan arrangement fee which is a traditional protocol that every financial institution follows. Eventually, P2P platforms follow the same protocol but under the name of an arrangement fee.

These social lending applications charge a loan arrangement fee for infusing the money lenders with owners, therefore such platforms charge a fee for each loan that they provide.

Top blockchain Development Company of India

Here are the top companies that may help you to bring out a P2P lending blockchain platform of your own.

1. Signzy

Signzy laid its foundation store in 2015 and its headquarter is present in Bangalore. Signzy is known for its expertise in developing P2P lending blockchain platforms that are robust, user-friendly, and very safe.

2. BR Softech

BR Softech is a leading blockchain app development company with 10+ years of experience, they provide 360-degree blockchain development solutions for various platforms like iOS, Android, and a lot more. 

3. InstaDapp

InstaDapp is one of the best players among P2P developers, they dominate the blockchain development industry by promoting the exchange of information among different DeFi blockchain protocols. 

4. KoineArth

KoineArth is a blockchain development company that provides reliable frameworks for the development of blockchain apps. They have proficiency in collaborating ERP-compatible Blockchain with AI and Nash Algorithm. 

Take home message

Peer 2 Peer lending applications are the modern-day facilities of this digital generation. They serve as an excellent alternative for those who seek a return on investment and for those borrowers looking for quick loans without the involvement of any financial institution.

Coming to the risks and disadvantages, everything in this world involves a bit of risk and sacrifice. If you have proper knowledge about the business module, then you can earn a good amount of fortune from the P2P lending blockchain platform.