But by spreading risk, peer-to-peer loans tend to have lower interest rates than comparable bank loans, consumer-credit experts say. That doesn't make sense. B

But by spreading risk, peer-to-peer loans tend to have lower interest rates than comparable bank loans, consumer-credit experts say. That doesn't make sense. Banks make tons of loans, which by definition spreads out the risk of any individual loan going bad. In addition, sometimes they have insurance or other derivatives on their books. I would say banks have their risk spread out a lot better than any individual investor, unless that individual is Paul Graham status of $$$.