Personal payday loan or personal credit?

The term “personal payday loan” is often used misleadingly. Banks and savings banks speak of a personal payday loan if the bank grants a classic installment loan to a private individual. “Private” defines the intended use or the target group. In contrast, the personal payday loan in connection with online credit marketplaces is an installment loan that is granted by a private individual. Operatively, this type of money lending is also processed through a bank, but the capital does not come from thebank, but from a private investor. has examples

Borrowers are both commercial and private customers. Depending on the platform and orientation – whether it is a pure credit marketplace or crowdfunding portal – self-employed, freelancers, small and medium-sized companies can be served in the area of ​​commercial customers. In addition, there are now also private loans that are aimed at very specific target groups. In this way, owners of an unencumbered property can borrow higher amounts of credit from private investors against collateral security.

Borrow money from private

Borrow money from private

Anyone who needs capital quickly and cannot or does not want to apply for a loan from the bank will find a welcome alternative to bank credit in a private loan. This can even be significantly more advantageous for the borrower – not only in terms of the particularly unbureaucratic process. Peer-to-peer borrowers primarily appreciate the quick availability of the money they need.

While the branch bank’s credit decision often takes several weeks, the customer of the online credit exchange knows after only a few days whether his loan project is being financed. If the borrower has a correspondingly good credit rating, financing is even possible within three days. In addition to the fast payout, customers appreciate the transparency of personal payday loans and the ability to exert influence themselves. Borrowers can present their project they want to finance on the marketplace and convince private investors of their project with a skilful presentation. If an investor is interested in investing in a project, but still has questions, there is the possibility to get in touch directly (anonymously) and to exchange ideas on an equal footing.

Borrowers can choose what interest rate they are willing to pay. If the borrower does not find enough investors within the deadline, he can gradually increase the interest rate until the project is fully funded. This mechanism gives the borrower more freedom of choice and control. Another plus point are the flexible repayment modalities. Special repayments or early full repayments are possible free of charge.

Who gets a personal payday loan?

Who gets a personal loan?

Just as with a bank loan, a credit check is also carried out for private loans. Although the criteria for online credit marketplaces are not quite as strict as for banks, not every borrower is admitted to the marketplace. Borrowers with a negative credit bureau, for example, are not given the opportunity to post their loan project on the marketplace. This is also necessary in order to keep the credit default risk as low as possible and thus protect private investors from losses or loss of yield.

Anyone who has to borrow 1,000 dollars quickly for a new purchase or for the overdraft facility is not exactly welcome at the bank. Banks earn almost nothing from mini-loans in the amount of a few hundred or thousands of dollars – on the contrary: if you compare the bureaucratic and organizational effort with the return, small loans are even a loss-making business for banks Borrow amounts of money.

Bank rate at the risk among self-employed people

personal loan

Certain customer groups, which are almost always rejected by banks, such as the self-employed and freelancers, have significantly better chances in online credit marketplaces and can borrow money without great hurdles. Banks rate the risk among self-employed people as too high due to strongly fluctuating income – and often wrongly and not understandable for those affected.

Because well-running business and a good credit bureau score are often not enough for banks. Many investors who are active in online credit marketplaces have started out small and are familiar with the problems and difficulties with which the self-employed at banks have to struggle. This is exactly why investors want to support this professional group and invest in commercial loan projects.

Last but not least, the certainty of helping like-minded people and doing something good is increasingly motivating private investors to lend their capital to self-employed and small business owners. Due to the rapidly growing business volume, the loan for the self-employed for crowdlending portals has meanwhile established itself from a niche to an important line of business.