What is P2P lending and how does it work?

What is P2P lending and how does it work?

What is P2P lending and how does it work?

Peer-to-peer (P2P) lending enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman. Websites that facilitate P2P lending have greatly increased its adoption as an alternative method of financing.

Can you get rich from P2P lending?

Peer to peer lending is one of the most simple and effective ways I’ve ever found to make passive income. It has outperformed my stock picks, selling old baseball cards, my own business ideas – everything. I’ve earned more money through it than I’ve earned at anything else except my day job.

What is the risk in P2P lending?

Losing money due to bad debts (credit risk). Losing money due to a P2P lending site going bust (platform risk). Losing money due to fraud or negligence. Selling into a loss (crystallising losses).

How much can you make with peer-to-peer lending?

How much can investors earn? You can expect to earn anywhere between 2% and 6% with peer-to-peer, but this will depend on how long you are happy to lock away your funds for, and who you are lending to. You’ll earn a higher rate of interest if you invest for longer and if you take on more risk.

Is peer-to-peer lending a good idea?

Investing in peer-to-peer (P2P) lending is a great way to boost yields and diversify your portfolio significantly. P2P lending is an alternative asset that offers attractive absolute and risk-adjusted returns, even in today’s low-interest-rate environment.

Is peer-to-peer lending legal?

Because, unlike depositors in banks, peer-to-peer lenders can choose themselves whether to lend their money to safer borrowers with lower interest rates or to riskier borrowers with higher returns, in the US peer-to-peer lending is treated legally as investment and the repayment in case of borrower defaulting is not …

Is peer-to-peer lending worth it?

Peer-to-peer lending, in which investors make unsecured personal loans to consumers and are often rewarded with average annual returns of 7, 9β€”or even 11%, might seem like a solution to disappointing returns in other areas. But peer-to-peer lending is a risky investment.

How do I become a peer-to-peer lender?

Getting started with P2P lending

  1. Open an account with a P2P lender and pay some money in by debit card or direct transfer.
  2. Set the interest rate you’d like to receive or agree one of the rates that’s on offer.
  3. Lend an amount of money for a fixed period of time – for example, three or five years.

How safe is P2P lending in India?

Yes, Peer to Peer (P2P) lending in India is safe as long as you invest through an RBI Certified P2P NBFC like LiquiLoans or Faircent. Although there are other factors that you must consider before you become a lender on one of these platforms.

Which P2P lending is the best in India?

Platforms Facilitating Peer-to-Peer Lending in India

Name of the P2P Platform Interest Rate (p.a.) Repayment Tenure
Faircent 9.99% onwards 6 months to 36 months
OMLP2P 10.99% onwards 3 months and 36 months
i-lend 15% onwards 6 months to 36 months
LenDenClub 6.5% onwards 3 months to 24 months

How do I get started in P2P lending?


  1. STEP 1: Decide on a business registration form.
  2. STEP 2: Register the company name.
  3. STEP 3: Register the platform domain.
  4. STEP 4: Create a team.
  5. STEP 5: Raise money for start-up capital…
  6. STEP 6: Develop a P2P Platform.
  7. STEP 7: Create a web portal.
  8. STEP 8: Testing the site and platform.

How do I start a P2P lending?