Terms

Peer-to-Peer Lending

Peer-to-Peer Lending

Abbreviation
P2P

Also known as “social lending” or “crowd lending,” Peer-to-peer (P2P) lending enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman. P2P lending websites connect borrowers directly to investors. The site sets the rates and terms and enables the transactions.

P2P lenders are individual investors who want to get a better return on their cash savings than a bank savings account or CD offers.

P2P borrowers seek an alternative to traditional banks or a better rate than banks offer.