How P2P Crypto Lending is Transforming the Lending Process
People have been lending and borrowing money from the time they learned to use the currency. The mode of fund transfer, though, has changed with time. The emergence of blockchain technology has revolutionized the lending paradigm by forging the path for peer-to-peer (P2P) lending. Blockchain-based P2P lending usually involves cryptocurrencies for borrowing and lending. Given that these digital currencies are not controlled by any government or financial institutions, and facilitate cross-border transactions, P2P crypto lending platforms expedite the process of borrowing/lending while breaking the geographical barriers.
The best thing about P2P bitcoin lending software, or any crypto lending software, is that they create a win-win situation for borrowers, lenders, and platform owners. The borrowers get the money they want without the convoluted formalities involved in the formal bank loan process. The lenders get to earn interest on the extra funds they have. You, as a platform owner, can earn from the transaction fee.
Now that you are aware of how P2P bitcoin lending software works for the lenders and borrowers, let us find out how the system exactly helps them:
How P2P crypto lending helps borrowers
- Credit score not taken into account
Even if the borrowers have a poor credit score, they won’t face any problem in obtaining the loan. People who feel they might not get a loan because of not-so-impressive credit history and the poor capacity to repay the funds can get a loan without a lender even considering their credit score.
- Protection of crypto assets
When borrowing on P2P crypto lending software, the borrowers need not dispose of their existing crypto assets. Lenders would be willing to give loans against borrowers’ crypto assets.
- Convenience of getting funds
Depending on the software the borrowers have been using, they may get loans released as fiat currencies or crypto-backed assets like stable coins. The term of their loan also depends on their negotiations with the lenders.
Minimum risk mechanism
P2P crypto lending software has the mechanism to maintain the percentage between the loan amount and the crypto collateral under a stable ratio.
- Zero Processing Time
P2P crypto lending accelerates the lending process. As soon as the borrower and the lender agree on the loan conditions, the loan process is quickly initiated and completed.
How P2P crypto lending helps lenders
- Guaranteed repayment
People may run away with the banks’ money, but absolutely no chance of losing funds when lending via P2P bitcoin lending software. There is enough collateral with the lenders to keep risk at bay.
- High returns
Lenders’ returns depend on the risk nature of the loan. In riskier profiles, the returns are also higher. The tenure and the amount of loan are also factors in deciding the returns. Interest rates that lenders get may vary with the level of risk.
- AML mechanisms to shield lenders from legal risks
AML processes are legally mandated on all P2P lending systems, which protects lenders from any legal action. In case of an unfortunate case of money laundering, lenders won’t find themselves under the radar.
- Distribution of risk
If a lender is hesitant to serve a loan request alone, they may opt for providing a partial amount and rope in another lender to arrange for the balance. Various lenders may come together to meet a loan request. This system helps reduce the risk, if any.
- Lending across national boundaries
With P2P crypto lending software, there are no state borders to limit the loan disbursement area. If lenders have the adequate lending capacity and the borrowers have enough capital, there is no one stopping lenders from disbursing a loan.
While lenders and borrowers are poised to benefit from P2P lending, you can, too, earn well as the platform operator.
If you are planning to launch a P2P crypto lending platform, you can either choose to build it from scratch or opt for a white label solution. The latter is a ready-made solution that can be easily customized as per your business requirements, thereby enabling you to quickly launch your platform. In addition, the cost of white label crypto lending software is relatively lower than building the software from the ground up.
At Antier, we specialize in delivering a white label P2P lending solution reinforced with market-leading features to expedite the deployment of your lending platform. Additionally, we are trusted for the development of custom lending software from scratch.
Schedule a free demo of our white label P2P crypto lending software or connect with our subject matter experts to share your needs for a custom solution.