Definition
Borrowing or investing money directly between individuals through online platforms, bypassing traditional banks.
What to consider
- Research the platform and understand how it works before participating.
- Consider both the risks as a borrower and the rewards as an investor.
- Keep tabs on repayment performance if you lend money.
Real world scenarios
- Investor Claire allocates a small portion of her portfolio to peer-to-peer lending, seeking higher returns than a savings account. She diversifies by funding multiple borrowers.
- When Toby’s bank declines his loan application, he turns to a P2P platform, finding a lender who accepts his repayment terms at a reasonable rate.
- Joan monitors her portfolio of lending notes, reinvesting proceeds from successful repayments into new loans to maintain continuous cash flow.
Related terms
Related Playbooks
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