peer to peer lending Archives

Peer to peer lending service as an online virtual market that puts together lenders (those with savings) and borrowers who are in need of funds (in the form of personal loans). This innovation is changing the way credit markets work.

If you want to understand the process of P2P lending in detail, you may go through https://crowdfunding-platforms.com/how-to-invest-in-crowdlending-p2p-lending.

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By completely circumventing the banks, it enables faster lending and borrowing. Investors get customized results with better risk while borrowers get instant credit at low-interest rates. Because it is a platform where two parties interact, you can either sign up as a lender or borrower.

Borrowers looking for a personal loan apply online. P2P lending platforms utilize data and technology to assess the credit worthiness of the borrower. You will be assigned a risk category and the applicable interest rate after your credit check.

Credit-worthy borrowers get loans disbursed in the minimum possible time. If you register as an investor/lender your account will be opened with a lending platform.

You can begin to invest in consumer loans of a number as low as 15K. You have the leverage to choose a loan in which you want to invest. You can build your portfolio by choosing from a variety of loan risk categories.

Once the borrower starts paying the interest rate you will receive a refund in the form of EMIS (principal and interest). P2P lending deals inflation-beating back a few percentages higher than bank savings accounts or fixed deposits. You can either withdraw or reinvest to enjoy the benefits of compounding.

Peer to peer lending is often considered riskier than other forms of investment. Looking at peer to peer lending or crowdlending sites they state the risk of investment is at your own risk and if you do not want to lose your money don't invest.

This is indicated in the prospectus with the SEC, which is the worst scenario for investors. This confession is often enough to scare most people. So why is a peer to peer lending so risky and if so risky why people are ready?

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The overall risk is based on the nature of the loan issued. There is no guarantee. Meaning, he has no real collateral supporting the loan like a car loan or mortgage. There is a promise to pay the loan by the borrower. This is not the only type of unsecured loan today.

Every credit card and store credit is an unsecured loan. These loans or lines of credit carry a high-interest rate due to the fact they are not guaranteed. The same is true of peer to peer lending.

How is a peer to peer lending different than a credit card? It's period to repay the loan or at maturity. Loans are usually more than three years. The borrower pays installments and no minimum. The goal is to completely pay the loan term.

So how risks are ready? They often carry the same risk as credit cards and other unsecured debt. The risk is always present non-payment or late payment, but many measures are taken by the lenders to reduce this risk.

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