P2P lending – A new way of passive income

Aug 4, 2022

Many people worldwide make a living by making wise investment decisions. Such a decision helps them to take advantage of their skills without spending excessive effort or time.

The term “passive income” refers to earnings that add to an individual’s cash flow income. It originates from various sources and requires a significant close to zero investment of time and energy.

Portfolio income, rent, and display advertising are some examples of such passive income. Newer forms include eBooks, YouTube channels, and peer-to-peer lending.

What is Peer-to-Peer Lending?

Lending between individuals is a form of peer-to-peer (P2P fullform) funding. P2P Lending platform in India such as LenDenClub act as a marketplace that allows the lenders to connect with a pool of borrowers through online channels. This enables you to lend money to individuals that will then repay you your amount in equated monthly installments with interest.

With an average of up to 12.0% returns per annum, you receive a handsome amount in exchange for the risk that you take with what are typically unsecured loans to unknown parties. On the contrary, your money lying idle in your savings account earns you a meagre 2-4% returns p.a.

RBI regulates the P2P lending Indian counterparts that cover the scope of the activities of such platforms. RBI also prescribes prudential norms to be followed by them. This makes P2P lending in India a terrific approach to diversifying your passive income sources and boosting your monthly revenue.

 

What Do You Need to Start P2P Lending

There are two things that you need to start your journey with P2P Lending:

  1. A Peer-to-Peer Lending Account
  2. Capital

Regardless of whether you’re new or a seasoned player in Peer to Peer Lending in India, your investments can start very small and go as high as up to ₹ 50 lakhs. The small ticket size allows you to explore your P2P journey with pretty low risk. You can steadily increase your allocation once you feel comfortable investing more into this asset class.

Choosing a Peer-to-Peer Platform

Choosing a reputable online platform with the best returns is essential to get the most value for your money. LenDenClub is a thriving marketplace that aims to bridge the gap between investors looking to diversify their portfolio with new-age alternative investment products and a large part of the Indian population that are still not covered by traditional credit-providing institutions.

The platform diversifies an investment among many borrower profiles to reduce the risk associated with repayment. Each loan in these investments begins with a small minimum investment.

To ensure excellent repayment behavior, the borrowers are assessed using over 200 data points and approved following several checks.

The entire P2P lending placement process is AI based. The platform takes into consideration various factors including your risk appetite and invests your money among a pool of borrowers based on your investment criteria giving your portfolio a diversified approach.

Why Go For P2P Lending In India?

An alternate investment avenue

Through LenDenClub’s state-of-the-art lending marketplace, P2P lenders connect with borrowers directly, eliminating the need for an intermediary. As a result, it provides hassle-free borrowing and lending regardless of location. In addition, P2P lending offers an individual investor or a financial institution the opportunity to become a lender and earn great interest rates annually, making it an excellent investment choice.

Portfolio diversification for insulation against risks

One of the main dangers associated with unsecured financing is the default. P2P lending, on the other hand, takes this risk into account by allocating a specific investment to several borrowers.

To reduce the risk of default, LenDenClub uses artificial intelligence (AI) and machine learning (ML) technology to map a specific investment.

Now, even if there’s a chance that a handful of borrowers will default, the diversification ensures that you still earn a respectable amount of return from the rest of the borrowers. So, optimal diversification is a must when it comes to P2P lending.

Regular source of passive income

Early financial stability can be achieved with proper investing at the right time. In addition, P2P lending helps create an additional income stream and enables one to increase their wealth.

Since the cash flow is bound to maturity, investors don’t have to worry about compounding. Say for instance, you choose a 5-year investment tenure, your money that you earn year-on-year gets reinvested automatically, generating an incremental stream of passive income each year.

Minimization of volatility

As they are spread over a large pool of borrowers and the risk is more widely spread. Investments are reasonably protected provided their non-volatile nature, while providing above-average returns. LenDenClub’s AI-based system offers hyper diversification where one’s invested money can be divided into units, as small as ₹1.

Everyone knows how volatile stock markets are or how risky real estate can be. So if you are a risk-averse investor or someone that is looking for a lower time frame, you are hardly left with any options that can generate returns up to 10-12%* per annum.

Consumers who invest with LenDenClub can remain invested for periods from one to five years. After every year, the money is reinvested without any hassles and offers handsome compound interest to the investor at the end of their desired time period, which can be a multiple of one year.

With the risk COVID-19 behind us, economic activity is predicted to increase, and as a result, many retail borrowers and SMEs are turning to P2P lending for financial assistance. Peer-to-peer lending is a developing asset class, and now is a fantastic time for investors and wealth managers to learn more about it and its unique benefits in the post-COVID 19 markets.

So, if you’re looking to give your passive incomes a boost, it’s time to check out LenDenClub where we assist both novice and experienced investors in building their portfolios with unconventional assets.

Related post

Leave A Comment