This is a form of borrowing and lending between individuals, or ‘peers’, without a traditional financial institution such as a bank or building society being involved.
If you want to borrow money, peer to peer websites can match you up with people willing to lend it to you.
The companies that provide these services (called ‘platforms’) act as intermediaries between borrowers and lenders.
Peer to peer lenders can offer lower interest rates than traditional lenders such as banks. Whether or not this is the case for you will depend on certain factors such as your credit rating.
Some of the best deals are only available only if you have an excellent credit history and no previous problems with missed payments.
If you apply for a loan, you’ll be credit checked using a credit reference agency and must pass the peer to peer company’s own checks.