What does peer-to-peer lending facilitate?

Peer-to-peer lending facilitates direct lending between individuals online, connecting borrowers directly with lenders without the intermediation of traditional financial institutions such as banks. This model enhances accessibility for borrowers who may not qualify for conventional loans while offering investors more diverse lending options.

In peer-to-peer lending platforms, people can invest in loans, and those seeking loans can often receive better interest rates compared to traditional banking options. This system leverages online technology to match individuals looking to borrow with those willing to lend, creating a community-based financing mechanism.

The other options pertain to more traditional lending scenarios or involve different financial structures that do not align with the peer-to-peer lending model, which is fundamentally about individuals transacting directly with one another.