Best P2P Lending Sites for Investors
Individual loans are a helpful tool for financing your debt. However, if you have poor or medium credit scores, it may be not easy to get one because many lenders only offer these financial products with good grades in mind. Fortunately, P2P Lending Sites for Investors is another tool in your pocket that may help you to get the money you need for your car repair or household expense.
Recommended P2P Lending Companies:
For the last four years, Lending Club service has enabled hundreds of thousands of people to invest their money in companies they trust in. The process is very simple. People interested in lending money to businesses start by developing a profile. Then, they get matched with borrowers who have an opportunity that fits their profile. With Lending Club, the process is secure, and the company regularly audited the loans to make sure they were good.
- Hedge against the stock market’s volatility
- Your money is automatically invested into different loans
- Ease of use and user-friendly App
- No minimum investment -Easy to find a loan
- Does not offer a money-back guarantee
- Not all businesses are eligible for a loan
Prosper is similar to Lending Club. As a bank or lender, you can invest in loans for various businesses, and the loan repayment process is straightforward. In addition, Prosper has a rating system that shows you how safe each loan is.
- Apply for a low-interest rate loan
- Get quick funding with no hidden fees
- Find loans for any business
- The rating system is user friendly
- Interest rates for credit cards can be sky
- High, and the repayment terms may not last long.
- A limited number of repayment terms with high fees and APR
- The rating system can be hard to understand
Funding Circle is a peer-to-peer investing company that allows investors to invest in loans (and various other types of securities) made by other investors. The company was incorporated in 2007 and has focused on making loans in the UK and Ireland. Investors don’t need to pay any fees to use the site. As a borrower, you will need to set your interest rate and determine how much you’re willing to pay as a loan fee.
- Finding a loan to help your business grow is very easy.
- Approved for cash within 3 days of applying
- Offer competitive rates on online loans without the need to meet minimum revenue requirements.
- There is no clear repayment method, and it is not possible to choose to pay off the balance of your loan at a later date.
- Lenders are not required to set the interest rate they receive.
- You cannot choose the date you want to receive your payment.
Peer Form is a website that allows people to connect and invest in loans that other people make. The website aims to make the process of making a loan as easy as possible. As a lender, you only need a relatively small investment to begin lending money on the site.
- No minimum investment
- No investment is needed
- Loans can be made without collateral or a credit check
- The website must make all loans
- Loans are only made for businesses that are located within the USA
Start Payoff was developed to help people who are looking for financial education. The website is focused on helping users take control of their financial future by providing them with a series of lessons and tools.
- Borrowers can prequalify with a soft credit check
- Offer competitive annual percentage rates
- Online borrower qualifications make it easy to find
- The only way to get a loan for up to $40,000
- Have an origination fee charged on your account, which can be expensive
- Oftentimes, these types of loans come with high rates
Why are Investors Turning to Peer-To-Peer Lending for New Investment Opportunities?
P2P lending sites have been around for almost a decade, but only recently have they become a recognized money-making opportunity for many investors. This is because most investors get frustrated with the returns they see on their bank accounts. They realize that they can get a higher interest rate simply by becoming “more sophisticated” with their investments. The concept of P2P lending sites is pretty simple.
Individuals or groups of individuals open online accounts at these sites where they can pool their money to lend to other individuals or groups of people. These people might include a spouse who needs an addition to their home, an individual who wants to start a business or a family who needs to finance the down payment on a car.
When an investor submits a loan application to one of these sites, the loan is evaluated according to several factors, including the individual’s credit score and the proposed use of the funds. Interest rates are not the only factor used to evaluate loan applications, but they are certainly one of the most important factors. Individual loans are a helpful tool for financing your debt.
However, if you have poor or medium credit scores, it may be difficult to get one because many lenders only offer these financial products with good grades in mind.
Is Peer-to-Peer Lending Safe?
Just as the stock market can be a hazardous investment for the average investor, so can P2P lending. The reason is that interest rates on loans can skyrocket very quickly. Early in the year, borrowers might find themselves paying 6 percent interest on their loan. Two years later, the same borrower might find themselves paying 30 percent interest on the same loan. This is why it is always a good idea to diversify your investment portfolio, regardless of the type of investment. By diversifying your investments, you reduce the likelihood that one type of investment will suffer a loss. Of course, diversification does not guarantee a money-making investment, but it does help to reduce your investment losses.
Find the Best P2P Lending Platforms for Investors
☑ Decide which type of P2P platform you want to use
Decide which type of P2P lending platform and how much money you want to invest. You do research to find out the best deal. There are some sites where you can go to conduct your P2P lending business, and you can compare these sites to decide which one is the best for you. You can also follow the recommendations of other investors and join a P2P club. These can be great places to find other investors with whom you can trade referrals and get second opinions on particular investment platforms.
☑ Compare Peer-to-Peer lending sites.
Before deciding which site to use, you should decide which one best aligns with your investment goals. Do you want to make small loans to individuals who need small loans? Or do you want to invest in a larger company that issues loans to multiple customers? Do your research to compare the different P2P lending platforms. You might find that one platform is more convenient or offers you a better deal than another.
☑ Read our P2P lending platform reviews.
We have reviewed several peer-to-peer lending platforms and have found some of the best ones to serve investors. These include Lending Club, Prosper, and IBR. Each of these sites offers investor-only accounts that allow you to invest a small amount of money to see how the market works. By opening an investor-only account, you are not exposed to any of the risks that the companies run.
You also do not have to deal with paying borrower fees. Investing through a broker is also an option. Whenever you are ready to invest, you can choose from various loan programs offered by these sites. Most of these programs are broken down into different loan tiers, such as “threes,” “fives,” and “sevens .”These tiers indicate the interest rate that you will pay on your investment.
3 Golden Rules of P2P Investing
☑ Don’t put all of your funds into one platform.
If you invest more than you are comfortable losing, you will risk losing it all. Choose platforms with investor ratings of at least 80. Ratings are a good indicator of a platform’s success rate.
☑ Don’t put all of your funds into one investment opportunity.
Putting all of your funds into one investment opportunity is almost always a bad idea. Investing in one company will reduce the number of potential investments you can make. More than one investment opportunity will leave you with the ability to diversify your portfolio, which will reduce your risk of losing your entire investment in one bad loan.
☑ Choose your P2P investment platform.
The next step is to choose a peer-to-peer lending site that offers investors the best loan opportunities. Peer-to-peer lending sites offer loans to investors through some different loan options. These options are not always clearly identified, leaving it up to the borrower to choose the wrong option. As an investor, you are protected from these mistakes by the loan agreement terms.
Understanding them beforehand can help you feel more comfortable about your investment. When choosing a peer-to-peer lending site, there are a few key factors that you should keep in mind. These include Rates and returns. Peer-to-peer lending sites offer various loan options to investors, ranging from five-year loans costing less than $2,000 to ten-year loans costing more than $20,000.
The interest rates on these loans are basically in the range of 6 to 36 percent. The higher the interest rate, the higher chance you will make on your investment. While the returns on these loans are usually quite high, they can suffer large losses in bad economic conditions—payment methods. Most peer-to-peer lending sites accept various payment methods, including direct payments through a bank account, payments through a check or money order, or a wire transfer.
When choosing a payment method, it is essential to decide what is most convenient.
Fees and risk.
While there are no fees associated with peer-to-peer lending, some are associated with individual loans. These fees include origination fees, investor fees, late fees, and loan fees. These fees can reduce investment returns and can even result in a loss of money if a loan becomes delinquent. Investing in peer-to-peer lending is not without risk. Before you choose to invest, you should understand the risks and make sure they are acceptable.
Peer-to-peer lending is a relatively new financial industry that allows investors of all levels to invest in the growth of various companies and organizations.
☑ Take things slowly and get used to the platform.
If you invest in one company too quickly, you might find that it is no longer a good investment. If you want to make sure that you are invested with a company worth a good amount of money before you invest more money. P2P lending sites offer a variety of different options for investors.
What Return Can You Get from Peer-to-Peer Investing?
It is important to note that returns in peer-to-peer investing are no guarantee of future returns, and this is because the size of the investment will be based on the amount of money invested and the type of loan offered.
Final Thoughts – Best P2P Lending Sites for Investors
Overall, the peer-to-peer lending industry is still relatively new, so there are many risks to consider before investing. Before you start and continue the process, make sure to do your research. If you’re planning on making a P2P investment, consult with an accountant or a financial advisor to help you create the best possible investment. Alternatively, you can start investing in these companies without much planning. Although this method may seem very risky, it is possible to minimize your losses by diversifying your portfolio.