Art Industry

Payday loans vs peer-to-peer loans

Alternative loans

One of the few platforms with a global presence is waging war on payday loan companies.

Lendico’s South African subsidiary produced a comparison table to highlight the marked differences between peer-to-peer loans and payday loans. Peer-to-peer platforms are positioning themselves more and more as the enemy of the payday lender. Many payday loan transactions have recently come under scrutiny for not providing enough clarity on the nature of their product, as well as the fact that these lenders often pay too little attention to the financial situation of the borrower. Despite these concerns, the payday lending industry is worth around 400 billion rand globally.

The main problem with payday loans is that borrowers are often trapped in debt. Although borrowers usually receive the loan extremely quickly, a single missed payment can result in significant additional late fees. In fact, many borrowers end up having to take out multiple payday loans in order to pay off their delinquent loans. It is for this reason that words like “spiral” and “trap” are so often associated with payday loans.

As a reminder of the contrasting advantages of medium and long-term loans – particularly of the peer-to-peer type – Lendico South Africa has produced the table below.

Subscribe to our newsletter

Leave a Reply

Your email address will not be published.