Loan between individuals or loan from a financial institution?

You hesitate between making your loan with an individual or with an organization?


Loan between individuals or loan from a financial institution?

Loan between individuals or loan from a financial institution?

Loans offers between individuals are growing more and more in France today. Thanks to this solution, borrowers who do not wish to go through financial institutions can borrow. It is a question of understanding the advantages and the disadvantages of a loan between individuals to know the concrete differences that there is with a loan from an organization and to know in what circumstances it is necessary to set up a loan between individuals.


The advantages of a loan between individuals

loan  individuals

First, personal loans are accepted for everyone, including sensitive profiles. This includes people who do not have a permanent employment contract, no fixed income, people with low incomes, those with a banking history, and so on. The criteria for accepting a loan between individuals are generally more flexible than those of a financial institution.

This can be explained inter alia by the fact that this type of loan is often made between relatives. It is possible to borrow from a family member or friend. However, it is also possible to borrow from one or more unknowns, particularly through platform sites.

There are sites for simple linking, and others more reassuring for lenders because more demanding of the profiles of borrowers for more security. In addition, there are also sites collecting funds between individuals who offer loans at single rates. These are also intended to be more reassuring for lenders since the repayment of the loan will be dependent on several borrowers.

The legislation is fairly well done so that individuals can borrow under all circumstances or lend safely. It is the drop in savings rates that is pushing individuals today to put their money in a loan between individuals. Interest on these loans is higher than other available investments.


The disadvantages of a loan between individuals

The disadvantages of a loan

Since peer-to-peer lending often takes place between people who know each other, it is important to remember the saying that good accounts make good friends. It is certain that when you sign a loan with a bank, it is less likely to get angry with your family.

In any case, be aware that it is strongly recommended to establish a contract, whether or not you know who is lending or borrowing money. It is even mandatory when the amount exceeds 760 € under penalty of not being able to recover his money in case of conflict. In the absence of a written document, the court will treat the loan as a gift and there will be no recourse. It is important to learn about the terms of such a contract and the different documents that must be established to ensure maximum security (debt recognition, etc.).

The loan between individuals is a very interesting remedy in certain circumstances but does not allow the borrowing of very large sums or the establishment of a revolving credit. It is a profitable investment for the lender but also riskier than a placement in bank because dependent on the solvency of others.

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