10 Quick Tips for Investing in Peer to Peer Lending
Peer to peer lending is also termed as crowd lending. The lending websites link the lenders and the individual borrowers. As the lending process has no middlemen, peer-to-peer lending is lucrative for both borrowers and lenders. Lenders get better interest rates, and the borrowers get the loan money in short period of time. The portals charge a fee for each of the lending transactions, which is quite low and alluring for all parties concerned
Here are some tips that you can use when lending your hard-earned money at the peer-to-peer websites and gain better revenues along with peace of mind.
1. Diversify your investment
You should invest in smaller amounts, and divide your money in the form of many different loans. This will help you to achieve more security, and you will also have a diversified portfolio, which can better absorb any unknown shocks.
2. Seek All Kinds of Diversification
Diversification not only means that you lend your money to different borrowers, but it also means that the borrowers should have different credit scores, and professions, among other aspects.
3. Be Fully Invested
It is better to invest all your money. Funds sitting idle generate nothing for you. Invest wisely, and use filters for the purpose.
4. Do your research
Online lending is cross-checked, and the borrowers have to undergo certain credit checks in order to get the money. In LenDenClub Borrowers are a checked on their personal, professional, personal, credit history and social backgrounds as well, and are rated according to their risk profiles. You should analyze the different borrower profiles fully, before lending the money. Repayments are easy and convenient when you lend your money to the more secure profiles.
5. Lend According To Your Risk Appetite
The lender can deny lending money after reviewing the risk profile of the borrower. Lenders in LenDenClub have access to the profile of borrowers. Hence, they can lend the money in accordance with their risk appetite and in a very secure way. The returns go higher with the risk coefficient of a borrower profile. It is better to be on the safer side and lend the money to those, who have a better credit score and overall ratings.
6. Choose a Reliable Platform
P2P lending platforms like LenDenClub have a very transparent processing methodology, and all fees are detailed to the lenders and the borrowers in an upfront manner. There are no hidden charges whatsoever, and the lenders can have the best peace of mind. Unlike other online and offline modes of lending, peer-to-peer lending is not complex. The process can be initiated and concluded in seconds; moreover, your money reaches your bank account swiftly and securely as well. For this to happen, you must check the platform deeply, and through all the resources that you have access to. Referral cross -checks, and online consumer reviews are some ways to know more about the authenticity of an online lending portal.
7. Plan prudently
While investing your money in P2P lending or any other approach, it is always recommended to plan wisely. For attaining long term financial goals, a balanced approach, and an overall financial planning always helps. The prudent planning is the key to getting best returns on savings, overcoming inflation and enjoying a financial security in the times of crises.
8. Keep Reinvesting
Do not let your gains and profits sit idle in your account. Keep reinvesting, and reinvest in the least of time, so that your profits and gains keep on expanding and improving.
9. Choose the Rates Wisely
Peer to peer lending platform like LenDenClub has a different list of borrowers with different interest rates. You should lend your money at interest rates that match your risk profiles. A low-interest rate will ensure that your money is borrowed soon, without delays. However, there would also be a lower ROI. Hence, choose the interest rate after considering what returns you require, and the feasibility of the deal.
10. Be Up-to-date
The peer-to-peer lending market is new and is evolving gradually in India. Be pro-active and be in touch with the relevant news, articles, blogs, and other information sources, so that you do not miss out on the new laws, platforms, and other aspects of the trade. For more information, you can keep visiting www.lendenclub.com for updates.