Crowd learning gives individuals the opportunity to lend money to other individuals or businesses. For this they naturally receive interest, and in this way they act as lenders, just as a bank would normally.
This is an alternative to those who either do not want to borrow money from a bank or who may not be approved for one reason or another. Here we explain more about crowdlending and peer to peer loans.
All about peer to peer payday loans in Denmark
Peer to peer loan (P2P) is the type given by crowdlending. This is done through an online service. The concept works much like a normal online payday loan. An agreement is entered into with a fixed interest rate and a specific repayment period. This only difference is that the agreement is concluded with a private person rather than a bank.
But in reality you do not borrow from one person, but from a larger group. For the borrower, this is invisible, but behind the platform are many people who each contribute a small amount. This means that a loan of DKK 10,000 can, for example, be distributed to 1,000 different people, each of whom lends you DKK 10. This gives the lender a smaller risk, which is why more people are willing to invest in this way.
How does it take place?
In Denmark, there are today three platforms for crowdlending that bring together the investors. Everything happens online, so you do not meet the people in reality. On these platforms you enter, and then you choose your desired amount and installment time, just as you would normally do.
The platform acts as an intermediary between you as a borrower and the investor. Thus, the bank is not involved, and this can give you lower costs.
Investors can typically get a better interest rate than at the bank’s deposit rate, and at the same time the P2P platform is more cost-effective than the bank is. Therefore, as a borrower, you can get lower interest rates with crowdlending, in some cases.
Who is it for?
For those of you who want to take out a payday loan, crowdlending is a good option. You can often get a more favorable interest rate, and you have the opportunity to get away from the requirements and conditions that the bank makes because it is private individuals. You also get the opportunity to have your application approved, which might have been rejected by the bank.
For those of you who want to borrow your money, crowdlending is a good investment. The risk is very low compared to other investments because it is spread on many borrowers, and the return is very reasonable. Therefore, crowdlending is a new and exciting way to invest your money, whether it’s small or large.