An individual or business who is looking for a loan goes to a
online lending platforms like LenDenClub to borrow money website. Once the borrower is
approved and listed, individual and institutional lenders can lend money to
that borrower.
Once the borrower gets funded,
he/she starts to make repayments every month. These repayments cover principal
and interest which the lenders receive.
Is peer to peer to lending safe?
Similar to other investment asset classes, p2p lending platforms also involves
risk. The risk is highly dependent on the P2P lending platform and their credit
policies which determine the quality of the borrowers. However, the risk can be
minimised by following guidelines suggested for regular lenders.
How to reduce risk in peer to peer lending companies?
Here are the most effective
methods to reduce risk in peer to peer lending:
- Check for credit verification process
- Diversify your funds into many borrowers
- Do your own due-diligence
- Invest peer 2 peer investment through
platforms which assists in loan recovery
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