Invest Anew - Peer to Peer Lending

Cut the corporate waste out of your banking and close the interest rate gap. Peer-to-peer lending is becoming a popular way to earn a higher interest rate on your money, while removing the middle man. Take a closer look at an example of how banks work. Next, find out what alternatives are available, just a mouse click away.

How Traditional Banking Works

The traditional idea behind banking systems goes something like this:

1. You deposit your money in a checking (earning 0.0% interest) or Savings (earning maybe 0.6% interest) account at your local bank.
2. The bank lends your money back to you, and others, in the form of auto, home equity, and other loans at interest rates of 6%, 7% or higher.
3. The bank then takes the difference (5.4% interest and up) as their profit.
   

How Peer-to-Peer Lending Works

Peer-to-peer lending works by eliminating the bank from the above equation. You have money that you want to save and another person has a need to borrow. Instead of earning very little in your savings account while another person has to pay a high interest rate from the bank, why not lend directly to that person?

Peer to peer lending makes this possible. You determine who you want to lend money to and what kind of risk you want to take.

Peer-to-peer lending sites give you the opportunity to take on some of the risk and turn your low (0.0% - 0.6%) interest savings into a much higher rate of return.

Popular Peer to Peer Lending Sites

Two of the most popular peer to peer lending sites available today are

www.prosper.com

and


www.zopa.com

Conclusion

Take control of your money and help it work for you. Challenge yourself to learn a new way of banking. Check out what it could do for you.

As always, make sure you understand where you are investing your money. If you have experience with peer-to-peer lending, give us your thoughts below.