What is Peer to Peer Lending?
Person to person lending, or as popularly known as peer to peer lending, is financial innovation, which enables any person can obtain a loan from another person, without the intermediation of banks.
Such ‘meeting’ of a borrower and lender, is facilitated by p 2p lending websites, wherein one can register as a lender (if one wants to invest) and as a borrower.
Such platforms charge a basic fee from both investors and borrowers.
How Peer to Peer Lending Works?
Investors can register themselves as lenders, on any of the RBI registered NBFC-P 2 P platform.
Once, the lender’s have committed to lend the money up to what borrower’s asked for, platform will carry out physical verification and documentation of the borrower. Agreement will be signed between the borrower and the lenders, post which, amount will be disbursed via escrow amount.
Benefits of Investing in P 2 P Lending Platforms
It’s an excellent investment opportunity for those who are looking for portfolio diversification options. It is entire new and relatively unexplored market, and non-interference of banks along with rbi regulated market, makes it a wonderful opportunity to invest.
Since p 2 p lending is a simple lending and borrowing, returns that will be received in the form of EMI, which investor chose at the time of investment. The probability of default is also low. Hence, the returns are pre decided.
Low correlation in respect to equity market
Lending-borrowing of money for personal use- daughter’s education, son’s marriage, business expansion, car loan etc, is less impacted by the fact as what is happening in the equity market. Hence, it is a recommended investment option for the new age investors, and the HNI and Ultra HNI ones who are looking for investment options to diversify.
Monthly cash flow
For those looking out for monthly cash flow options, this p 2 p investment option is perhaps the best one in the market, right now. Borrowers who have a high chance to default on the principal payment, carry high risk, and hence are ready to give an extra % of rate of interest. It is exactly opposite with low risk investors. Borrower with high CIBIL score will fetch low returns but high safety. Hence as an investor, one can choose to play safe and earn low return or play risky and fetch above 18% return, or play balanced – have all sorts of borrowers in the portfolio.
Investors have many options to choose among borrowers
As already mentioned, investors have wide spectrum of borrowers to choose from – across CIBIL scores, occupation, risk, interest rate, etc.
All the above factors, make P 2 P lending platforms, the best bet for investment.
If interested to invest in this product, kindly get in touch with us by giving a call at 9810184368, Whatsapp at 9582012572.