Want to make your money work harder for you , but don't know how?
This blog will help you invest wisely in the most lucrative investment giving higher rate of returns, so continue reading.
P2P lending is the abbreviated term used for Peer to Peer lending & is also known as Crowd funding. P2P lending is an online financial innovation which is fast, convenient having high growth potential.
As the name suggests , you will have to register yourself in these online P2P platforms to invest your money as loans or borrow money. The platform brings together like minded investors & pool in their resources to give unsecured loans to listed verified borrowers for their personal needs like Education, Medical expenses, Home loan / renovations, Debt consolidations, Family functions, Business needs or Advance salary. In return these platforms charge nominal fees for processing the documents. Since the investors & borrowers are directly linked together through these P2P platforms, there is no financial institutions as middleman helping investors earn better returns of up to 30% p.a. on their funds invested.
Since these are online platforms you can start your investments using your smart phones or computers & instantly you are able to view all the borrowers credit score, risk factors & personal details any time as per your convenience over your phone. Based on its various benefits, P2P lending is fast gaining popularity among investors as an alternate investment opportunity for earning high returns on your investments, but the risk involved in such lending will always be a debatable issue. One important point is that P2P lending Compared to stock markets, tends to have both less volatility and less liquidity.
5 top rated P2P portals in India are:
Why use Non financial institutions for borrowing ?
Financial institutions gives loans based on CIBIL ratings of a person or if the person pledges some asset as security against the loan. Hence, individuals having lower CIBIL ratings or nothing to pledge against loan borrow from these platforms. Also there is less paperwork involved in this & disbursal of loans is also quite faster. In case of early repayment of loan there are no negative charges. These platforms are ready to provide unsecured personal for a wide range of reasons which are generally not covered by traditional financial institutions.
Below are 6 simple steps for borrowing from P2P Platforms :
1) Register yourself as borrower on these platforms. You need to submit all necessary documents for registering.
2) Fill up loan requirement form & get it assessed by the platform.
Based on your repayment background check & financial good health & tenure of loan repayment the platform will assign your grade & interest rate payable. Normally all platforms grade borrowers from A to E where A grades are less risky graduating down to E grade who are more risky & hence higher interest rates will be applicable.
3) Make your loan LIVE on the portal. Through this investors all over India will be able to view your loan requirement & commit for funding your loan.
4) Physical verification of your documents. Once your loan is completely funded you will have to get all your original documents physically verified by the portal.
5) Borrower needs to sign a legal agreement and provide approx 3 undated cheques ( differs from portal to portal) equal to EMI amount for each investor.
6) Sanctioning of loan: Once all legal formalities have been completed, Individual investors will transfer money to Escrow account and from Escrow Account money will be transferred to your bank account. After which you need to repay the loan as per the terms mentioned in the agreement. You may also choose to prepay the loan without any penalty.
** Please note delay in repayment of loan EMI will reflect & downgrade your CIBIL ratings. It will also attract legal proceedings against you.
Why invest in Non financial institutions Unsecured loans ?
P2P lending is hassle free & offers high rate of returns even up to 30 % p.a. You can start your investments with investments as low as ₹500 to ₹5000 & start building your investment portfolio. Each borrower undergoes through a very stringent credit analysis including CIBIL check and physical verification & are graded accordingly on portal. In case of delay or default in loan repayment the portals offer legal recovery support for recovery of loans lent from their platform.
Below are 6 simple steps to start lending on P2P Portals :
1) Register yourself as Investor / Lender on the portal. You will be required to submit your documents like Address proff , PAN card details, Photo & few Bank details.
2) Browse through verified borrowers list. Read carefully the interest rate and risk category of each loans before making your investment decision.
3) Once you have shortlisted the borrower you will have to transfer money from your bank online to your P2P portals wallet which are actually Unique Escrow account assigned to each investor for disbursal of loan.
4) P2P portal accumulates funds of different investors for funding a loan. Once sufficient amount is accumulated they first physically verify all documents of the borrower & makes them enter into legal contract by signing an agreement.
5) After entering into contract with borrower the P2P portal disburses funds to the borrowers account & the Investors starts getting back his Principal as well as interest amount as EMI from borrower.
6) The portal charges processing fees for their services which they deduct from the EMI received in investors portfolio.
Some important Do's & Dont's of P2P lending for investors:
Happy investing. Do leave your comments or queries on the comment box below & I will be happy to be of any help to you.
This blog will help you invest wisely in the most lucrative investment giving higher rate of returns, so continue reading.
P2P lending is the abbreviated term used for Peer to Peer lending & is also known as Crowd funding. P2P lending is an online financial innovation which is fast, convenient having high growth potential.
As the name suggests , you will have to register yourself in these online P2P platforms to invest your money as loans or borrow money. The platform brings together like minded investors & pool in their resources to give unsecured loans to listed verified borrowers for their personal needs like Education, Medical expenses, Home loan / renovations, Debt consolidations, Family functions, Business needs or Advance salary. In return these platforms charge nominal fees for processing the documents. Since the investors & borrowers are directly linked together through these P2P platforms, there is no financial institutions as middleman helping investors earn better returns of up to 30% p.a. on their funds invested.
5 top rated P2P portals in India are:
- Lenden Club. ( use code LDC150916)
- RupeeCircle. ( use code INDV-5728)
- CashKumar
- I2I funding
- Faircent
Why use Non financial institutions for borrowing ?
Below are 6 simple steps for borrowing from P2P Platforms :
1) Register yourself as borrower on these platforms. You need to submit all necessary documents for registering.
2) Fill up loan requirement form & get it assessed by the platform.
3) Make your loan LIVE on the portal. Through this investors all over India will be able to view your loan requirement & commit for funding your loan.
4) Physical verification of your documents. Once your loan is completely funded you will have to get all your original documents physically verified by the portal.
5) Borrower needs to sign a legal agreement and provide approx 3 undated cheques ( differs from portal to portal) equal to EMI amount for each investor.
6) Sanctioning of loan: Once all legal formalities have been completed, Individual investors will transfer money to Escrow account and from Escrow Account money will be transferred to your bank account. After which you need to repay the loan as per the terms mentioned in the agreement. You may also choose to prepay the loan without any penalty.
** Please note delay in repayment of loan EMI will reflect & downgrade your CIBIL ratings. It will also attract legal proceedings against you.
Why invest in Non financial institutions Unsecured loans ?
P2P lending is hassle free & offers high rate of returns even up to 30 % p.a. You can start your investments with investments as low as ₹500 to ₹5000 & start building your investment portfolio. Each borrower undergoes through a very stringent credit analysis including CIBIL check and physical verification & are graded accordingly on portal. In case of delay or default in loan repayment the portals offer legal recovery support for recovery of loans lent from their platform.
Below are 6 simple steps to start lending on P2P Portals :
1) Register yourself as Investor / Lender on the portal. You will be required to submit your documents like Address proff , PAN card details, Photo & few Bank details.
2) Browse through verified borrowers list. Read carefully the interest rate and risk category of each loans before making your investment decision.
3) Once you have shortlisted the borrower you will have to transfer money from your bank online to your P2P portals wallet which are actually Unique Escrow account assigned to each investor for disbursal of loan.
4) P2P portal accumulates funds of different investors for funding a loan. Once sufficient amount is accumulated they first physically verify all documents of the borrower & makes them enter into legal contract by signing an agreement.
5) After entering into contract with borrower the P2P portal disburses funds to the borrowers account & the Investors starts getting back his Principal as well as interest amount as EMI from borrower.
6) The portal charges processing fees for their services which they deduct from the EMI received in investors portfolio.
Some important Do's & Dont's of P2P lending for investors:
- Do diversify your portfolio. Do not invest huge amount of money on a single borrower.
- Do diversify & invest in different loan requirements like Home loan, Business loans, Education loan,etc. Do not invest huge amounts in same loan category.
- Do read all credit ratings , risk factors & personal details of borrowers to analyze their repayment capacity before lending.
- Do invest small amount of money in the beginning & start building your portfolio slowly. Do not invest huge sum of money without first understanding the pros & cons of this module.
- Do diversify your investments on different P2P lending portals available in India. Do not invest all your money on the same portal.
Remember P2P portals are non financial institutions & hence are unregulated. To reduce the risk factor in India the P2P lending platforms are regulated by The Reserve Bank of India (RBI) who formulate rules to protect the lenders as well as borrowers. From October 2017 all P2P lenders need to mandatory have a license to continue their businesses & RBI has categorized them as NBFC-P2P. Due to RBI regulation there is some degree of safety and credibility to P2P lending platforms.The cap set by RBI for investment by lender is Rs. 10 lakhs and for a borrower is Rs. 10 lakhs.
Below are 5 top rated P2P portals in India which you can refer to start investing:
Below are 5 top rated P2P portals in India which you can refer to start investing:
Happy investing. Do leave your comments or queries on the comment box below & I will be happy to be of any help to you.
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