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Long vs. Short-term Lending

There are two types of lendings known in peer to peer lending market i.e. long and short-term lending. The difference between them lies in the period of funding and the compounding effect. Short-term lending has a shorter period because the loan tenors range from 1 to 3 months. On the other hand, long-term lending has a longer tenor and is usually more profitable.

In terms of value, long-term funding can generate greater returns. The effect of compounded interest is obtained by revesting the returns and results of the previous lending. This allows Lenders to get multiple profits from their initial capital.

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