There are many ways of borrowing money, ranging from cheap to expensive, honest to fishy, with high and low rates. P2P may seem like the most convenient system, however, everything is not as rosy as you’d might imagine. We’ll tell you about the new risks of P2P in this video. New possibilities, Bank killers, Unique crediting technology – the press was enthusiastically praising P2P crediting. It looked simple: there are a borrower and a lender. Lenders have money and borrowers don’t, but they need it desperately.
The advantage of the P2P system was its independence from other financial institutions. You don’t need a huge army of employees, pricey office spaces, and equipment. The system charges a modest commission around 1 to 2 percent. So with the value of a loan at 20%, the creditor receives his 18% and the borrower is there with a 22% loan. Theoretically, this system should work, and it does. Lending Club, Prosper, and SoFi, the biggest three P2P operators in America, make billions in profits. Funding Circle, Zopa, and RateSetter in Great Britain are also in high demand.
However, this system isn’t as smooth as one would wish. P2P services are trying to provide their clients with the complete information about the borrower, but cases of fraud and loan defaults are not uncommon. Legal regulations of financial processes don't always allow one to know whether the lender is acting within the state’s legislation. This was a problem for one of the most well-known Russian P2P companies Vdolg.ru, which stopped lending money in 2016 and has yet to reopen. One of the biggest Chinese platforms, Ezubao, also disappointed P2P enthusiasts when their classical Ponzi scheme was revealed.