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I was under the impression that peer to peer loans were cheaper than normal loans, but from what I can see the interest rates on peer to peer loans in Switzerland are high (as much as 10% per year). Why would anyone want to get a p2p loan when they could get a lower rate at a bank?
Greetings,
The interest charged for peer to peer (p2p) loans depends on the creditworthiness of the borrower. This holds true for personal loans from banks and other lenders as well. The benefits of p2p loans over personal loans from conventional lenders are as follows:
1. You may be able to get a p2p loan even if you do not have steady employment (as a student, for example). Conventional lenders require steady employment.
2. You may be able to get a p2p loan even if you are retired. Conventional lenders will not normally give loans to retired people, even if they receive a high pension and can easily afford to repay the loan on time.
So p2p loans are ideal for people who are willing and able to pay good money for a loan, but cannot get loans from conventional lenders. It is also worth noting that the interest rates charged (typically between 4.5% to 9.80%, depending on your creditworthiness) compare very favorably with those charged by conventional lenders for personal loans.
Mortgages and other secured loans backed by collateral, on the other hand, are not generally offered by p2p platforms as of yet. Rates for mortgages, for example, are much lower than those of personal loans.
Best regards from Moneyguru
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