Over the last few years, P2P lending has gained popularity in the investment and loan industry. Numerous people around the globe are looking upon Peer to peer lending with hope. As per the statistics of 2018, global P2P lending market worth $15 billion. The market is expected to grow $44 billion by the year 2024 due to the increasing number of borrowers in the last few years.
Yet, when it comes to investing a lot many investors get into doubt. As P2P lending is quite new to the industry, not many people are aware of its benefits and risks of investment.
Are you considering putting money in P2P lending platform? Do you wonder if it’s a safe decision of not? Well if you are finding yourself on the fence, we are here to offer you the needed guidance on the risk associated with P2P lending and how to minimize it:
Is P2P Lending Safe?
Every other financial asset that involves investing money comes at a risk. P2P lending domain is no exception. Though, there are plenty of websites that are putting constant efforts to improve and offering people with a reliable P2P lending platform. To ensure safe investment taking smart steps and knowing the risks related to money lending is important.
P2P Lending Risks:
- Platform bankrupt:
One of the most threatening risks that can scare you is the Platform going bankrupt. The website through which you are investing money, if it goes bankrupt, you are also likely to lose all your invested funds.
- Borrowers fail to return:
One of the big concerns that are linked with P2P landing is faulty borrowers. In this genre of investment, you are expected to lend your money to an individual or business. If the borrower fails to pay back, you are more likely to lose you money. Default borrowers can lead to zero interest or might make you lose a part of your investment.
- Economical and geopolitical issues:
It could turn out to be a disaster for you to invest in P2P lending in the situations where the financial market is crashing. As this lending platform is new, we are unaware of the effects and responses P2P market can experience at the times of collapse. Additionally, P2P lending can also turn out to be a risky platform in term of political grounds.
How to Minimize the P2P Lending Risks?
- Detailed research:
It’s significant for you to do detailed research and take each step wisely to minimize the risk affairs of P2P lending. You can look upon certain reliable P2P lending website and finical product review platforms to understand the market quite deeply. Crowd Reviewed is one such platform that offers an honest review on several old and latest P2P lending websites’ performance. As per Mintos review conducted by Crowed Reviewed this lending platform is safe and legit for investors. The site has also reviled that Mintos is the 2nd biggest platform trusted by investors as well as originators in Europe. Thus, before investing in any platform you should go through a review site to get an unbiased view of the site’s performance.
- Look for buyback guarantee:
Not all, yet certain sites offer the investors buyback guarantee. The guarantee ensures that even if the borrower turns out to be faulty and won’t pay the returns still, the investor can be on the safe side as the P2P lending platform buys back all your invest amount.
- Monitor your investment:
To be a successful investor you need to act like one. Monitoring your investment and P2P platform regularly is important. Make sure you take some time form your schedule and analyze your investment account status at least once in a month.
- Do not go over the board:
One of the other smart moves that can ensure your safety from all risk is your investment strategy. You should limit the amount that you are investing in. Do a self-analysis and know how much money you can invest that won’t hurt you much even if you lose it.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.