Peer-to-peer (P2P) lending is an innovative system of borrowing and lending money between individuals without the need for a bank or other financial institution. Often considered as a type of alternative finance, it has become a popular option for those looking to access credit quickly and without the worry of high interest rates.

The concept of peer-to-peer lending is simple. Individuals act as lenders and borrowers and it is up to them to negotiate the terms of the agreement. The amount lent and the length of the loan's duration are just some of the aspects that need to be considered. This type of alternative finance has grown quickly, with lenders in the UK alone having lent over £3 billion by the end of 2018.

Peer-to-peer lending has several advantages over traditional lending products. To begin with, it offers more transparent loan agreements and borrowers can benefit from not only lower interest rates than banks, but also the flexibility of a tailored loan. It doesn’t have to be a long-term loan either; P2P lenders usually offer short-term loans as well as more traditional long-term loans.

Another advantage of P2P lending is that the lenders can choose who they want to lend to, by selecting borrowers with the best credit scores and the lowest likelihood of defaulting on the loan. This means lenders are able to reduce the risks associated with loan default and can offer better interest rates to worthy borrowers.

Finally, the availability of peer-to-peer lending services has opened the door for those with a lower credit score to access credit without having to worry about being turned down. Typically, individuals with a less than stellar credit score have had to rely on high-interest payday loans to try and access the short-term financing they need. Peer-to-peer lenders, however, are often more willing to lend to those with a less than perfect credit score, provided they are able to prove the ability to pay back the loan.

Overall, peer-to-peer lending has many positive benefits for borrowers and lenders alike. Not only does it give those with a lower credit score the opportunity to access credit, but it also offers more transparency and flexibility than traditional lending products. This makes it an attractive option for those looking for a more tailored and cost-effective loan.