One thing we’re sure you’ll agree on is this – when it comes to investing, there are way too many options out there today with regards to the investment instrument, medium, asset and more. Some you’ve heard about, some you know, some you use.
And often, the sheer volume of these options can be confusing.
So we figured let’s take one option every now and then, and tell you a bit more about it. And so today’s honour goes to – P2P Lending.
Let’s take a step back and acknowledge how the world of ‘lending’ has worked in India in the past.
The most traditional way of getting a loan was to go to banks and other such financial institutions which were offering credit to people. However, the processes and collateral requirements often made it difficult for a lot of people to take loans – they were outright rejected from getting a loan if they didn’t meet certain criteria. The next best thing that people often turned to for loans was then friends, relatives, and peers in the same social group. But even in such a case, if the lender did not personally know the borrower, it was unlikely that they would extend a loan.
This was a problem because these inconsistencies in the lending and borrowing practices meant that oftentimes people did not have access to money in the most crucial junctures of their lives, or when they most needed it.
P2P lending is a solution to exactly this conundrum. It is a mechanism that allows borrowers to avail loans with interest and allows lenders (or investors) to earn interest with each investment. P2P lending is typically carried out through websites or online applications.
With Deciml too, you can opt to invest with a P2P Lending Platform and become a lender in this system. Here are some things to know about this –
Deciml App facilitates your investment in one such P2P lending platform called Lendbox – a company founded in 2015 and registered with the RBI. When you invest in P2P lending through Lendbox, your investment is diversified across an array of verified and creditworthy borrowers – allowing your money to gain up to 10% returns from the exact moment of investment instead of the slow roll that comes from a savings account.
By this point, you are probably wondering how safe is it to invest in P2P lending?
The main risk involved in investing in P2P lending is associated with defaults from borrowers. But Lendbox is tied up with an RBI-approved recovery agency to help Investors deal with defaulters, and it works to mitigate your risk by diversifying your investments. You’ll find some solace in knowing that to date the default rate at Lendbox is around 1%. So, it is fair to say that investing in P2P lending is safe, secure and regulated by the RBI.
In conclusion, we’ll say this – P2P lending has opened up a lot of doors for borrowers and investors, especially those who are starting out and are cautiously foraying into the world of investing.