5 Reasons You Should Start Investing in Peer to Peer Lending

Mar 15, 2017

Peer to peer lending in India is one of the fastest emerging alternative investments today. It is predicted that that lending money online will become a $50 million market in a few years. This investment option delivers a better deal for the investors in several ways:

1. Diversification:

If you have already exhausted options in your investment kitty or are looking beyond traditional instrument vehicles, lending money online through a P2P lending platform could serve your need. Peer to peer lending can make a strong addition to your existing portfolio as it offers a regular income. It makes a wise financial sense to allocate a part of your investment to P2P lending.

2. Better Risk-Return Trade off:

It is a commonly known fact that interest on the debt or fixed income instruments offer lower returns and are shrinking further. Though equity instruments offer higher returns, the risk association is higher due to market volatility. As compared to these options, peer to peer lending gives a moderate trade-off between risk and return. The interest rate on peer to peer lending in India usually ranges between 12-35%. Even after deducting tax, the returns on P2P lending remain comparatively higher than other instruments.

3. Liquidity:

Most traditional forms of investment call for compromising on liquidity when it comes to generating better returns. For instance, you have to stay invested in equity for a longer term. In case of real estate, it is difficult to sell easily. As far as gold is concerned, it is difficult to hold in a large amount and is often viewed as an emergency selling option. P2P lending negates all these concerns by letting the investor earn the desired rate of return and period of investment.

4. Ease of Investing:

Peer to peer lending companies in India such as LenDenClub makes the lending process very convenient for the investors. These companies have a well-defined and easy to use online system displaying all the necessary information regarding the borrowers’ profile, the amount of the loan, etc. All that investors have to do is click a few buttons to complete the process.

5. Transparency:

P2P lending platforms offer complete transparency of transactions and information regarding borrowers. After the investment, you can get income reports to track how your loans are performing. With RBI drafting regulations for P2P lending, it will lead to even greater transparency, ensuring safety for the investors.

There are several peer to peer lending companies in India. Choose the one which maximizes all of the above benefits as well offers you recovery support in case of defaults.

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