What does 'peer-to-peer lending' offer to borrowers?

Peer-to-peer lending provides borrowers with the opportunity to secure personal loans at lower interest rates compared to traditional banks. This financial model operates by connecting individuals who need loans with investors looking to earn a return on their funds. Because peer-to-peer platforms typically have lower overhead costs than traditional banks, they can pass on these savings to borrowers in the form of more competitive interest rates. Additionally, the streamlined online processes of these platforms often allow for quicker approval and access to funds, appealing to those seeking less expensive financing alternatives.

The other options do not accurately represent what peer-to-peer lending typically offers. Higher interest rates than banks are not a characteristic of peer-to-peer loans, as they are primarily designed to be more affordable. Access to large corporate loans is outside the usual scope of peer-to-peer lending, which primarily focuses on personal loans for individuals rather than businesses. Finally, loans backed by collateral are not a definitive feature of peer-to-peer lending; many personal loans offered through these platforms are unsecured, meaning they do not require collateral.