Hello, all good people! Welcome again to a new chapter of your financial knowledge. I hope these blogs are increasing your financial knowledge and making your money work for you. So, now coming to the point, in the previous blog, I wrote about investing money by lending it to someone and shared various merits, demerits, and risks involved. Today, we will talk about investing money in peer-to-peer websites, also known as peer-to-peer money lending platforms
INVESTING THROUGH P2P MONEY LENDING OR PEER TO PEER MONEY LENDING PLATFORMS
Most of these platforms are online, so in an online peer-to-peer lending platform, the lenders can choose the expected interest rate and time to get their money back, and they can also choose the need, interest rate, tenure, etc. The system matches the best lender to the borrower and the borrower to the lender. As an investor, you get a higher interest rate compared to banks because this is a direct deal between the lender and borrower. Here, peer-to-peer (P2P) lending websites exist as a space for fair deals. In 2005, the first peer-to-peer lending platform, ZOPA, was registered in the United States. It has been quite successful and profitable up to this point, and laws will be enacted to establish a P2P platform and to make the system fair and transparent to lenders and borrowers. In India, p2p lending platforms are regulated by NBFCs (non banking financial corporations), which are part of the RBI (Reserve Bank of India).
HISTORY OF P2P LENDING PLATFORMS AND PRESENT FORM
After Zopa, many lending platforms came into existence. So there is a strong need for any regulating authority like FDI in the USA, RBI in India etc. because at present, p2p lending platforms are not able to create a big market in the economy to meet their needs. So we can say that this market is still in its infancy.
HOW YOU CAN INVEST YOUR MONEY THROUGH LENDING PLATFORMS
FUTURE OF P2P MONEY LENDING PLATFORMS.
Till date, p2p platforms had grown slowly as expected because the idea behind this lending platform is great: to connect the person who needs money with the person who have extra money. P2P is a fantastic site for both investors and borrowers, but the companies are unable to create a significant market space in the economy and loan business due to a lack of marketability, advertisement, reliance, financial awareness, literacy, and the ruling body's lack of interest in the growth of their market. The future of P2P companies seems bright, as banks have also started taking an interest in them and investors are investing some money in it. In the future, the use of this website is expected to increase due to an increased literacy rate and its increased marketability.
If the government and banks take an interest in it then massive growth can happen in this industry full of opportunities.
BENEFITS AND MERITS OF P2P LENDING
DEMERITS OF P2P LENDING PLATFORMS
CONCLUSION
- The loans are normally unsecured and not protected by the government and insurance companies, so your investment may be in danger if the borrower defaults.
- ZOPA was the first peer-to-peer lending company established in 2005.
- The P2P lending industry has been regulated by financial conduct authorities of the country since 2014.
- PaisaDukan was the first P2P lending company to receive a certificate of registration from the Reserve Bank of India.
- There are almost 30 P2P lending platform companies licensed by the RBI in India.
- I hope you liked amd understood this blog. Comment down or mail at dhirajpatel234@gmail.com if you have any query, suggestion or suggested blog topic.
can we invest in other countries P2P companies too.
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