Credit Default Risk: LenDenClub Peer to Peer Lending platform puts its best efforts into sourcing the right borrowers, and do thorough underwriting, information verification, and KYC checks. However, there is still a possibility of fraud or credit default risk for the borrower. It’s part and parcel of any lending activity. Here, your investment is into loans. In a way, it’s a lending activity. Though LenDenClub’s platform’s performance is good, and it delivered good results in the past, it is vital for you to understand the risk involved in the investment. To mitigate this risk, your investment should be divided into small amounts. On the LenDenClub platform, the capital matching algorithm helps you achieve the same.

Collection Risk: If a borrower does not repay, the platform uses various channels (which follow all RBI-specified guidelines) to recover the funds and ensure you receive your funds back. This includes digital follow-ups, physical meetings with the borrower, and initiating a legal recovery process against the borrower. Based on the loan amount, outstanding amounts, and physical connectivity of the place, the platform decides on the type of collection efforts in the best possible way. Again, because your investments are divided into hundreds and thousands of loans, the effect of non-repayment by a particular borrower will be very minimal.