What is a characteristic of peer-to-peer lending?

Peer-to-peer lending is characterized by lenders and borrowers connecting directly, typically through an online platform. This model eliminates the need for traditional financial institutions, such as banks, which traditionally serve as intermediaries in the lending process. By facilitating direct connections, peer-to-peer lending can often provide more favorable terms for both lenders and borrowers, as it allows for competitive interest rates and a faster approval process.

The essence of peer-to-peer lending lies in its ability to create a more streamlined and accessible borrowing experience while offering a wider variety of lending options. Since this form of lending is operated through online platforms, it empowers individuals to bypass conventional banking routes. This setup also allows investors to diversify their portfolios by investing directly in loans to individuals or small businesses, making it a unique approach to finance.