Investment in peer to peer lending is a latest financial innovation that connects investors and borrowers. It has become one of the best platforms for safe investments and higher returns.
The term P2P or peer-to-peer lending is buzzing around off lately. What is it all about? Well, the activity of borrowing and lending dates back to pre-historic era. With change in time, such trends witness changes too. And in the present era, it is P2P which is leading the top charts in the industry. Basically, it is a debt financing method that lets people lend money and borrow without seeking any help from any financial institution. If you ask why peer to peer lending, the answer is – it eliminates the need of middlemen and makes the procedure simpler than it used to be.
Working of peer to peer lending?
We all know the traditional method of borrowing funds. It is basically done with the help of the bank. However, borrowers are finding it difficult due to high interest rates, and bad credit scores are making it a hard nut to crack. This is where P2P lending comes into the scenario. Here a borrower can easily get a loan from other individuals who wants to lend their money.
Benefits of investing in P2P lending
If you are planning to invest your amount, then the latest feasible option trending in the market is P2P lending. It is offering a huge number of benefits to the investors, and is also known to be serving better than investing in stock markets. Some of the benefits of P2P lending investment are:
• You can invest any amount; it can be as low as Rs. 500 and as high as Rs. 50,000 per borrower.
• P2P industry is now under the regulation of RBI, hence there’s more scope for lenders to trust the segment.
• Platforms such as LenDenClub also help investors in going through the borrower’s profiles before making a sound decision.
Types of peer to peer lending
Use a systematic approach
After you understand why invest in P2P lending, you need to take a step by step approach to reach the goal. Investors should never invest the entire amount at one go. It is better to diversify the funds into multiple borrowers. Nowadays, P2P lending has become a trend and every day there are new prospects with more attractive opportunities. Therefore, begin with investing minimal amounts and then proceed slowly in the same manner.
In case you still have confusions, you can reach out to your relationship managers. They will be able to guide you further with your investments.
Advantages and disadvantages of P2P lending for investors
In every case, there are both pros and cons we need to acknowledge. Let us know about them before we step in the field.
1. The money can be split in different kinds of loans
2. Lender can be an individual or an institution
3. It is your decision to lend and invest money and you get to pick your borrower
4. Returns are higher than what we get from the banks.
You can seek guidance from portfolio managers who are available to help you at any moment.
Every investment has risks, and so is there for P2P lending. However, the risks can be adjusted by investing smartly. And it all starts with selecting the right platform.
You can never be sure unless you have experienced it. Give P2P lending a try by signing up with LenDenClub today. Start with Rs. 500 and start diversifying your funds from the beginning. You can sign up online or by using our mobile apps (Android or iOS).