Alan Greenspan once said, “any informed borrower is simply less vulnerable to fraud and abuse”.

Big Banks and financial institutions have always taken advantage of asymmetric information to profit off of depositors and borrowers. Now Btccredit P2P enables lenders and borrowers to have anytime access to credit at a low interest rate, which is not decided by global politics, state economic policy or the region where you live. Instead the interest rate is decided by the free market and the people.

P2P lending, although with its risks, is highly beneficial for both borrowers and lenders, however most investors take a ‘tread with caution’ approach towards this process. To understand how exactly risk is minimized on P2P Lending platforms, let us take the example of the biggest P2P company in the market of the United States, Lending Hub.

The securities of Lending Club are tradeable on the SEC (Securities and Exchange Commission), and it was the first ever P2P Lending Company to do so. In FY 2017–2018, Lending Club has enabled loans worth $1 Billion. The average interest rate for 36 month loans last quarter was 10.6%, while the average interest rate for 36 month loans for Personal Loans was approximately 21.5%.

Image Credits: lendacademy.com

The Process is as follows:

The investor can choose any lending platform according to variety of parameters that include

How much money they want to invest How they want their money to be used Which loan term fits their needs. For example, someone who wants the principle amount returned sooner may go for a 36 month band, while other may choose a 60 month band What is the minimum interest rate that they are willing to lend for

Before singing up for P2P lending, an investor must always find out the details of the loan documents of the website, and check the mechanisms in place in case of a loan default or in case the company goes insolvent and shuts down. Although the loans are secured through smart contracts, and P2P lending platforms guarantee accurate credit ratings after in-depth analysis, mitigation of risk becomes the responsibility of the lender as well.

Similarly, a borrower can choose a lending platform and enter their details which enables the platform to undertake a credit rating analysis. These details may include things like their Social Security Number, their assets, their salary, etc. This analyses their previous credit history and their capacity to repay the loan on time. The borrower must keep in mind that their activities may be shared with credit bureaus, and their rating may decrease if they default or pay late. This might also affect their future prospects of borrowing. However, all platforms do not necessarily share lending risk detail with investors, and the private details of each borrower are kept confidential This ensure access of credit to everyone, the final lending may depend on the individual prerogative of the lender.

Btccredit and other decentralised marketplaces have a mission statement that resonates with the same, Stani Kulechov, the founder of ETHLend said that, “Wouldn’t it be great to live in a world where everyone had the same access to finance, or even the access to finance in the first place?”

Once the lender has checked the credit of the potential borrower, the borrower may chose a personal loan or other packages such as a debt consolidation. Debt consolidation is used for diversification, as a strategy it enables you to combine multiple loans into a single loan. This enables the borrower to shift loans, so instead of paying back one loan, you make a switch to another. However, they still owe the same amount, it is simply a strategy that works in the same way as refinancing.

The funding process in Btccredit is pretty quick and efficient, the money is transferred to the borrower electronically, and they are required to make interest payments through the same medium. The process is extremely decentralized and democratizing, which means that no one can stop anyone from lending or borrowing transparency is also ensured at all points in time.

So why don’t you give it a try and take a hands on experience on out lending platform which is also the most advanced built for decentralised market.

If you have any kind of doubt or questions, you can easily reach out to us on any social media platforms.