The rise of “crowdlending” is just another example of how the internet has shaken up practically every sector of the economy.
Before, someone looking for a personal loan had to go to the bank, credit union, or payday lender. If the person didn’t have good credit, they’d have to deal with high interest rates if they were approved for the loan at all.
Now, peer-to-peer (P2P) lending websites match borrowers with lenders who are just regular people like you.
Instead of taking the entire amount from a single lender, a loan can be pooled from multiple lenders. As the borrower pays back the loan, you will receive a portion of your investment back plus interest.
Some popular P2P lending platforms are Prosper, Perform and Upstart.
As with any investment, there are risks associated with P2P lending. The borrower may default on the loan and leave you and the other lenders in the lurch. But if you have extra money earning pennies in a savings account, crowdlending could be a way to make some passive income.