Written by:
Srivindhya Kolluru
TORONTO STAR
June 18, 2023
📰 Read the FULL ARTICLE here.
Read an excerpt here.
Money is one of the biggest sources of anxiety for Canadians. Indeed, 48 per cent of us have lost sleep over finances, and 36 per cent have experienced mental health challenges over it, according to FP Canada’s 2023 Financial Stress Index.
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Today, however, there are options beyond the traditional to help in dealing with those sudden expenses, including going online using a fairly new source of credit — peer-to-peer (P2P) lenders. These platforms connect borrowers with investors — often other individuals — who will either partially or fully fund a loan.
“It’s kind of like a dating app for debt,” says Cindy Marques, a certified financial planner and director at Open Access Limited, referring to how P2P platforms match investors with borrowers based on criteria such as the size of the loan and interest rate suited to the borrower’s credit history.
Peer-to-peer lenders fill the gap between the interest rates traditionally offered in the form of high-interest credit cards and payday loans and lower-interest rate loans through a financial product like a secured line of credit or a home equity line of credit (HELOC).
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Marques adds that as long as you have a good credit score, you’ll likely be greenlit for a loan faster and with less paperwork than a traditional bank demands.
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Marques says before signing up to find out if there are upfront fees for using a platform. “Is it actually as flexible as it’s made to seem on your website, or will there be penalties?” She recommends inquiring whether borrowers can make changes to their payment arrangements even after obtaining the loan.
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The area of lending is clearly changing and is dynamic, but presents some issues such as the proper backing of debt, and the proper valuation of someone’s ability to borrow.
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