Peer-to-peer (P2P) loans are a form of financing where individuals can borrow money directly from other individuals through online platforms, bypassing traditional financial institutions like banks. These platforms connect borrowers seeking loans with investors looking to earn higher returns on their investments. P2P loans often offer competitive interest rates and flexible terms, as they assess borrowers' creditworthiness using various criteria, sometimes considering factors beyond traditional credit scores. Borrowers benefit from potentially lower interest rates compared to traditional loans, while investors can diversify their portfolios and earn interest income. However, P2P loans carry risks, such as the potential for borrower defaults, making it important for investors to diversify their investments across multiple loans.
