Peer to peer lending is an old concept but recently became famous among yield-seeking investors. Especially investors who want to build an investment portfolio find p2p lending an excellent option. Peer to peer platforms match lenders to the potential borrowers and allow lenders to earn a high rate of return. Today, in the environment of low-interest rates, p2p loans will enable you to get high-interest rates. With p2p lending, you can invest in different types of loans, including personal loans, business loans and p2p bridging loans. With every passing day, this type of lending becomes popular, and the interest rate varies from platform to platform.
Here are some reasons that will help you understand why you should invest in p2p lending.
Ease and Flexibility
Peer to peer platforms are online, so there is no need to go to the agent office or meet him in person. From making an account to depositing funds and receiving repayments, all the processes are online. That is why investors find it the most convenient way to invest. Moreover, they can see their portfolio any time by logging into their account on their computers or mobile phones.
Diversification is a key to minimising the risks. When investing through p2p platforms, you can spread your investment across multiple loans. In this case, if one loan goes bad, you can still continue to get profit from other loans. Moreover, if you invest in secured p2p loans that are bridging loan, the chances of losing your capital are very low as you have a right to sell the secured property to get your money back if a borrower defaults.
High Return Rates
Peer to peer lending offers high-interest rates compared to saving accounts and traditional loans. If you follow all the safety measures to reduce risks, you can earn a double-digit interest per annum. Peer to peer lending offers short term loans so you can start making a profit even the next month of investment, while other investments can take years to give yield.
Freedom Of Choice
Peer to peer platforms allow lenders to select the loans they want to invest in. you can invest in secured loans to reduce the chances of risks. Moreover, you can set lending criteria and choose borrowers that have high credit scores so that there are fewer chances of borrowers defaulting.
Start With Small
You do not need a huge amount to invest in peer to peer loans. There are many p2p platforms that allow you to start from small amounts. Thus, it is an excellent opportunity for new or small investors to invest their money in peer to peer lending and earn high rates of returns.
Moreover, with this type of lending, you can earn a passive income as monthly repayments of your loan amount. Before investing, you must look at the risk associated with p2p lending so that you can take the necessary measures to mitigate the risks and invest in a safe way.