There are now many alternatives to banking investment such as peer-to-peer loans to invest your money. But how are they interesting and beneficial to you?
As an investor, P2P loans allow you to generate additional income with a lower level of risk than most investment vehicles offered on the financial market. But they are also and above all the ideal way to offer help to those in need.
Here are 3 good reasons why investing in peer-to-peer loans may be wise for you.
A way to help people in need
This asset highlights the social and solidarity aspect of the loan between individuals. By becoming an investor / lender on approved P2P lending platforms, you offer your help to people in financial difficulties and generally unable to use the bank loan system.
Through this device you will provide support to individuals who do not have access to the financial resources necessary to carry out their projects or solve urgent problems. But also create a social link by participating in the economic development of your community.
A simple way to have additional income
Higher returns are the nub of P2P investing. By paying your loans, you will be able to obtain very interesting and effortless additional income.
Indeed, with a return of more than 10% per year, loans between individuals are more profitable than most savings books. Note that this yield may vary more or less depending on the platform. In any case, you will regularly receive part of the loaned capital added to interest and enrich your wealth.
In addition, thanks to the Auto-Invest mechanism available in certain platforms, your savings can be automatically reinvested in investments that are as safe as they are profitable. This according to the investment criteria that you will have previously selected and defined in your personalized investment strategy.
An investment with little risk
Like any investment, the loan between individuals involves certain risks, these are nevertheless moderate and lower than those of the financial markets. This is due more to the preventive measures adopted by platforms and guarantees backed by loans aimed at limiting the risk of significant losses.
To secure investors, the platforms impose relatively strict eligibility criteria for borrowers and carefully assess their creditworthiness. Only profiles with high solvency and offering good guarantees are generally admitted. Otherwise, they are simply rejected or have higher borrowing rates applied. Lenders who engage in it are therefore aware of the risks.
Guarantees backed by loans
Also with a view to limiting risks, your investments may be covered by guarantees. On platforms like Mintos mortgage guarantees may be required from borrowers to finance the repayment of the loan in the event of default.
The non-repayment guarantee follows the same logic and commits the platform to repay you the loan and its interest in the event of default by the debtor. Another commonly granted guarantee is that of repurchase thanks to which you will liquidate your loans by reselling them to recover part of your invested money.