Right now, it’s a little tough to get a loan from a traditional lender. Even credit card companies are tightening their lending standards and considering interest rate hikes. If you have a credit score below 700, the terms you are offered by banks and other lenders just aren’t that great anymore.

And that’s peer-to-peer (P2P) lending is becoming more popular.

P2P lending

Like seller financing, which is gaining traction in the real estate market, peer-to-peer lending is when ordinary people lend money to others. It is possible for someone with less than perfect credit to get better terms (and even get approved) when they might not with traditional lenders. The ordinary people lenders can choose which people they want to lend money to. And they don’t have to lend the full amount. It is possible to lend a smaller amount, and get your portion of the interest.

It’s an interesting concept, but still risky for the lender. But the borrower has the potential to benefit quite a bit.