Peer-to-peer lending

Peer-to-peer lending is when people borrow money from each other, instead of borrowing from a bank or a credit union. It works like this: someone who needs money can go online and find other people who are willing to loan it to them, and then they agree on the amount to be loaned, and the interest rate (the amount the person borrowing has to pay back in addition to the original loan amount). The loan is then tracked online, and both people keep records of it. This way, the person borrowing the money knows that they have to pay it back, and the person lending the money knows that they will get the money (plus interest) back from the borrower.