Peer to Peer Lending History: Modern Times

As the economy continues to decline, many people are discovering peer to peer lending for the first time. While it may be a new concept to many, peer to peer lending has been in existence for thousands of years, and many civilizations were built as a result of these loans. This type of lending is now more relevant than ever, thanks to the strong foundation that was laid thousands of years ago.

Over the past few years, the face of lending has changed dramatically. The housing and economic crises are driving a current lack of traditional loans as well as higher interest rates. Suddenly, it has become difficult for many people, even those with good credit, to get a loan from a bank at a decent rate. Approvals are down to record lows and, as a result, more consumers are seeking alternative options.

Enter the era of social networking and the availability of peer to peer loans on a much wider scale. In the past, when many of us needed loans, we would hit up family or friends, usually to mixed results. If this failed, it meant going to a bank and, if an approval wasn't given, the end of hope for getting a loan. Now, there are many more options available to consumers.

One of the first entrants into the peer to peer lending online arena was Kiva, offering a non-profit global service. Soon after that, Prosper debuted in the United States with tremendous results. Their growth has been so quick that the company recently announced they were expanding into Japan. Even Zopa, a UK peer to peer lending site, is growing quickly and will soon be offered to residents in Italy.

As interest rates have gone up and lending terms become less favorable to consumers, peer to peer lending has stepped in to fill a large demand. Now, consumers have the ability to set their own rates and literally shop for a lender to meet their needs. Likewise, peer to peer lenders now have a much wider pool when it comes to managing their money, and have the ability to reach people all over the world.

Today, interest rates for peer to peer loans have dropped dramatically, much like in Greece in 100 BC. During this time period, rates dropped to as low as 6% as the markets evolved and demand became greater. Today, driven by similar supply and demand, consumers have access to low rate loans through peer lending.

Peer to peer lending will continue to evolve, much as it has for centuries. However, never before have these loans been available on such a wide scale. This bodes well for the future of lending, and for borrowers and lenders alike. Peer to peer lending has made a difference in people's lives for thousands of years, and with the current state of the economy, it may be the saving grace that thousands need to stay afloat today. Like ancient times, peer loans remain a time-proven method of getting financial help.