P2P groups win their ability to cut out the banks as intermediate. The online lenders said they could facilitate loans more efficiently than banks and offer a attractive service, while giving investors attractive interest rates.
Peer to Peer lenders generally have lower cost structure than traditional banks because they don’t have large staff and different branches. So, they have very low overhead compare to traditional banks and borrower get a lower interest rate and lender get more profit on investment.
There are also some significance risks with Peer to Peer lending. The biggest advantage of Peer to peer lending is that you don’t need to pay prepayment penalty. And such loans have quick approval process.