Loans between individuals have always been with us. In fact, long before banks existed, individuals already left money between us. Throughout history these practices have been seen better or worse according to different times, but in any case it is something that is there and that we cannot ignore.
In this blog we mainly talk about these types of credits, so it would be absurd not to start by first explaining their basic concepts, what they are and how they work. But first of all, we must know a concept that is new and that is the key to the operation of loans between individuals: P2P.
What does P2P mean?
First, let's briefly explain what P2P is. The P2P concept comes from English peer to peer , translated into Spanish point to point . This concept derives from the networks for the exchange of P2P files. There are different applications and protocols to use this type of network whose fundamental principle is to share files or information.
Loans Between Individuals - P2P
At a time when credit is highly restricted and delinquency rates have skyrocketed to 1996 highs, businesses and individuals are looking for traditional margin financing methods.
In this case, it is not about the doubtful quick loans , the unification of the debt or the extension of the mortgage, but a trend that has already spread through Europe and the United States but has still barely set foot in Spain: personal loans between individuals or individuals, from a strictly legal point of view.
This boils down to the fact that an individual can act directly as a bank, lending their money to a third party and obtaining more profit than they currently obtain from their deposits. In order to obtain this, it benefits from platforms that offer the communication and management necessary to be able to make the loans .
Operation of P2P Loans
The operation of these P2P loans is simple. You just have to enter as a user on a website that makes loans between individuals in Spain, as is the case with SEattle Meditation . The amount is specified, the term in which you want to return and the interest that you are willing to pay. From that moment on, the user will receive different proposals from the lenders.
For the lender / investor , you get a higher return on your money than any bank would give you for a deposit. For his part, the borrower gets a loan at a much lower interest than that offered by a conventional financial institution and, on top of that, does not have to face any type of commission. Finally, the intermediary , that is, the web page that serves to contact and carry out a control of the borrower and to verify the information that he provides, for which he charges a commission.
In the end, these systems try to take advantage of the possibilities of interaction offered by the Internet to bypass the traditional intermediaries that until now have dominated the business. Its operation has a lot to do with the rise of social networks on the Internet , since deep down they create a community of alternative lenders.
From a legal point of view , in Spain there are still no specific regulations to regulate this type of loan. They are generally carried out through a private contract in which conditions are set out and which also serves to prove the existence of the loan, which on the other hand has a series of tax implications.
In the international market, Zopa.com , a pioneer in this field, and Prosper.com are the two main players in this newly created market for personal loans. The first operates in five countries and has a database of more than 200,000 users, which shows the growth that this business is acquiring.
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