What does peer-to-peer lending involve?

Peer-to-peer lending involves borrowing and lending money directly between individuals without the mediation of traditional financial institutions like banks or credit unions. This model uses online platforms to connect borrowers who need funding with lenders who are willing to provide loans. Borrowers can often receive better rates than those offered by banks, while lenders can earn interest on their investments.

This practice democratizes access to loans, allowing individuals to bypass conventional lending processes, which can be lengthy and involve strict credit requirements. It also allows for a wider range of loan purposes, from personal loans to financing small business ventures, all facilitated through an online marketplace. Thus, option C accurately captures the essence of peer-to-peer lending by emphasizing the direct interaction between individuals in financial transactions without traditional banking institutions.