Advantages of peer-to-peer lending:
High annual compound income. The annual interest rate of deposits in ordinary banks is only 3%, and wealth management products and trust investments are generally below 10%, which is incomparable with the annual interest rate of online loan products above 20%.
Simple operation. The authentication, bookkeeping, clearing and delivery of online loans are all completed through the network, and both borrowers and lenders can achieve the purpose of lending without leaving home. Generally, the amount is not high and there is no mortgage. It is convenient for both borrowers and borrowers.
Develop thinking. Online lending has promoted the interaction between industry and finance, changed the observation horizon, thinking context, credit culture and development strategy of loan companies, and broken the original lending situation.
Disadvantages of online lending:
Unsecured, high interest rate, high risk. Compared with the traditional way of borrowing, peer-to-peer lending has no guarantee at all. Moreover, the central bank has repeatedly made it clear that the annual compound interest rate exceeds 4 times the bank interest rate and is not protected by law. It also increases the high risk of online lending (generally 7 times or even higher than the bank interest rate).
Credit risk. The inherent capital of online lending platform is small, so it can't undertake large amount of guarantee. Once there is a large loan problem, it is difficult to solve it. Moreover, some borrowers also make loans for the purpose of fraudulent loans, while the founders of the loan platform have some ulterior motives, and cases of absconding with money also occur frequently.
Lack of effective supervision means. Because online lending is a new financing method, the central bank and the China Banking Regulatory Commission have no clear laws and regulations to guide online lending. For online loans, the regulatory authorities are mainly neutral, do not violate the rules, and do not recognize them. However, with the prevalence of online lending, it is believed that relevant measures will be formulated and implemented in time.