Peer To Peer Micro Loans
Microloans Peer to Peer in NZ
The peer to peer microloan is also known as P2P lending. It is an online based lending where lenders link with borrowers on peer lending websites.
P2P lending in New Zealand took effect on 1st April 2014 when the Financial Markets Act 2013 came into action enabling licensing of peer to peer lending services. The first loan provider to get licensing for P2P lending in NZ was Harmoney then was later followed by Squirrel money.
How P2P Micro loans Work
Features of P2P lending
Set up for generating profit.
Many lenders can fund one loan.
No collateral required.
How Peer To Peer Microloans Work
Investor: someone who wishes to invest their cash in peer to peer lending signs up in a peer lending platform. One can fund many loans with as little as $25 each. There are two lending options; either doing automated lending by the peer lending platform or doing manual lending by going through the loan applications manually.
Borrower: the person in need of a loan also opens a profile on the peer lending website. Stating how much they are looking for, the purpose of the loan, etc.
Lending process: when the lender sees a borrower profile they would wish to support, they indicate the amount of cash they want to put towards the loan. The duration takes for a borrower to obtain the full amount depends on the lenders’ willingness to contribute.
Disbursement: after attaining the loan amount, the cash borrower can then access the funds for their use.
Loan repayment: most peer to peer loans have a loan term of 36-60 months. The borrower will make payment as agreed. Some peer lending companies charge fees every month from the repayments. A borrower can repay the loan before term.