At a time when bank interest is slightly above 0% and when government bond yields are hardly elsewhere, savers are looking for an alternative to make their savings more profitable without constraining themselves to the volatility of the stock market. And beyond the savings possibilities, loan platforms between individuals are emerging as a more effective solution for creating additional income using personal loans between individuals.
Peer-to-peer lending is still a relatively new concept in its current form. “Microcredit” has always existed, friends lending money to friends in times of need. But if the only remedies were previously limited to the restricted circle of the family and the entourage, the arrival of new platforms specialized in P2P allows you today to create an additional income by lending your money. Radiating with its multiple advantages (no credit check, fewer fees, higher interest rate), the loan between individuals allows you to push the limits of bank savings. This is because when you let the bank lend your money, they keep a large portion (over 4.95%) of the interest collected to pay their own fees. This is why you can only earn 0.01% on a savings account.
Investing in peer-to-peer lending works the same way as investing in SMEs through crowdfunding. But if the latter is more aimed at small businesses, peer-to-peer is concentrated in the loans that individuals have taken out. The loan amount is not capped, and you can also invest small amounts, from 10 euros. On the other hand, yields can easily go up to 16% per year. It is true that this type of investment is not without risk, but peer-to-peer platforms created additional income.
The advantages of P2P platforms for personal loans:
And to complete these advantages of peer-to-peer lending, let’s mention that this type of investment, such as bank savings or crowdfunding, generates passive income. Once you have invested your money, the income is paid into your account every month, without you having to do anything.
The amount of your P2P loans depends on the amount you invest and the type of loan. Borrowers deemed less risky benefit from lower interest rates than applicants who have payment incidents. By the way, P2P lending platforms rate borrowers based on their credit history, the type of loan, and the amount they want to borrow. If you simply want to earn a stable income with lower risk, you can choose to invest in the categories of loans deemed less risky by the platforms.