What is the criteria to lend money through a Peer to Peer platform

One of the risks involved is that someone you lend to might default on their payments, therefore meaning you will not get the interest rate you were told at the beginning. The company you are working with will take measures to decrease and limit your risk by spreading your money across a wide pool of borrowers and risk profiles. They will also carry out through checks at the beginning of the process however it is crucial to know that your rate is not always fixed and could decrease.

As with any time of investing the higher returns are always made with the riskiest investments, it is the same in peer-to-peer lending. Choosing to lend to this risky demographic will result in a higher interest rate (if they do not default) but you also run the risk of having a lowered return.

GETTING YOUR MONEY OUT

To be sure of the largest return you must be willing to invest your money for as long as five years at a fixed rate. When you lend for longer you are showing a commitment to whoever you have lent to, and becuase of this they want to reward you and give you a higher return on your investment.

If you do need your funds sooner than when you initially signed up for, the platform will have a process in place to get your funds back to you within a 1-5 working days. When you do this your interest rate will normally decrease by around 1% for taking your money out prematurely.

Everyone you lend to will be repaying on a monthly basis. This means your return will be passed back to you each month as income. It is up to you whether you withdraw this money each month, or reinvest in to the system therefore creating compound interest.