Unlike the traditional bank and private lending institution loans, the recently popular peer to peer lending portals are funded directly by the investors. Investing the idle funds in peer to peer lending india is a smart decision because it earns a higher yield than a bank deposit fund. Remember, it is not a get-rich-quick system, yet a genuine way to earn money. If the lender is cautious while taking the risks and balances the risks by making certain checks, P2P lending can benefit both lenders and borrowers.
How do lenders benefit from P2P lending?
Investing in P2P portals is an alternative investment choice against fixed deposits, Mutual Funds, stocks, bonds, real estate, businesses or gold deposits, because of the following attractive benefits
- Guarantee high returns – Flexibility to set an interest rate allows the lenders to enjoy a premium yield. The borrowers with lower credibility hold higher risk factors and the lenders can fix greater interest percentage for such loans. Once approved, the lenders start to generate a fixed income every month.
- Individuals/institutions – Both individuals as well as institutions can register as p2p lenders. Depending upon the needs and requirements, the borrowers can choose the type of their lender.
- Lower risk – Unlike the Mutual Funds or stock exchange, P2P funds are not subjected to market turbulence. Lenders are assured of returns, with substantial interest. Further, the reliable p2p online lending sites like monexo.co facilitate the lenders to choose the borrower rating, which is specified after making a complete credit check.
- Easy to start – With the state-of-the-art online portals, lenders can start their investment account within a few minutes.
- Low funding rate – From the beginning, the leading websites like monexo.co do not set any limit for investment. Therefore, the lenders can start even with Rs. 1,000.
- Diversified portfolio – The invested fund can be used to lend multiple borrowers, with variable interest rate and loan tenure, for regular yield and reduced risks.
- Auto reinvestment – With auto-reinvestment facilities, the amount invested is not idle rather it gets automatically invested in the loans, which includes the pre-set interest rate, tenure, and type.
How does P2P money lending benefit the borrowers
- Quick loan process – With digital platform, the loans get approved within a day’s time, unlike the traditional funding institutions.
- Lower interest rate – When compared to credit card loans and private lenders, the P2P interest percentage is pretty low.
- No hidden fees – Borrowing money from P2P is transparent and apparent in the fixed monthly repayment schedule, without any hidden fees.
- Remain anonymous – The borrowers need not meet or contact the lenders unless required.
- No penalty – Pre-closure loans are encouraged and hence, the borrowers can close their loan at any time, without any penalty.
- Unsecured loans – Many lenders are ready to offer loans for good credit score and strong income profile, without the need to submit any collateral security.
- Rating – With a good credit rating and regular repayment practices, the borrowers get a higher rating, which ensures lower interest rate for additional borrowing online.