5paisa Loans Blog

Now Borrowing Money for 3 months is just so simple with P2P

By Anurag Srivastva | 28 Mar 2020

If you are up against a small funding shortfall for a couple of months, what do you do? Obviously, personal loans from banks are too cumbersome and have to be at least a commitment of 2-3 years. Borrowing from friends and relatives can be quite embarrassing. In such cases, borrowing on the P2P platform can be a good option. If you are planning to repay the money in a short period of around 3 months, then even the interest cost should not be too much of a burden for you. Here is how P2P borrowing can offer an alternative.

P2P borrowing offers flexibility

If you apply for personal loan from banks, there is an EMI commitment apart from the elaborate documentation. Although, banks do give you low interest personal loan offers, they lack flexibility. That is where you can apply for personal loan on the p2p platforms. Here, based on your credit record and CIBIL score, there are individuals willing to give you personal loan offers. They can be pure interest models wherein you just pay the interest for 3 months and repay the principal at the end of 3 months.

P2P borrowings does not require collateral

If you want to get a loan from a bank at a lower rate of interest, you can opt for secured loans by pledging your shares, mutual funds or even your property. But in these cases, you are putting your assets at risk. Relatively, P2P borrowings are lower in risk as the collateral is not required. P2P loans are, by definition, unsecured and hence you don’t need to offer any collateral. Also, if you have a good score and keep a clean payment record, your costs can come down sharply.

Manage costs with better credit score

This is an extension of the previous point. If you are able to keep a good credit score and a good track record, then the next time you apply for personal loans on the p2p platform, the algorithm will automatically offer you loans at lower rates. The onus is on you to maintain a good credit score. Remember, now the P2P companies also submit your payment details to CIBIL and so a good track record can help to enhance your CIBIL score too.

Minimal paper work and cost effective

Unlike bank personal loans you don’t need to worry about upfront fee, processing fee, administrative charges and hidden costs. There is a small registration fee and then the entire process is online and digitally executed. This reduces your time, effort and the costs of execution.

The moral of the story is that; in case of emergency cash needs P2P lending can do a good job of managing these gaps. Of course, a solid track record will only help you that much more.