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Peer-to-peer lending is a method of debt financing that enables consumers to borrow and lend money to “peers,” without going through an official financial institution such as a bank, credit union or financing company.

For lenders, the benefit is earning more interest by backing peer loans rather than saving funds in traditional savings accounts. The downside is the risk taken on by the peer lender in that even the peer borrower does not pay back the loan.

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