What is P2P Finance?
P2P financing means to peer-to-peer financial transactions. In short, a financial transaction with another person who has money to borrow money.
Why are there transactions between person and person, despite the existence of existing financial institutions?
The current financial institutions are judged to be irrational about loan review. In the case of lenders, it is often difficult to lend as much as you want in a bank. Those who need urgency money will inevitably use higher interest loans in non-banknotes. Also, even for investors, it is difficult to earn high profits due to low interest rates in banknotes, and stable profits are not guaranteed due to unstable markets.
In this situation, P2P finance is starting to attract attention. Currently, P2P financing has a positive effect on both consumers and investors.
P2P financing, which is an individual transaction, can save the fixed costs consumed by banks, it guarantees low interest rates for borrowers and high returns for investors.
From January to November, the average return of all P2P investments was 12.09%. It is a great thing to guarantee a return of more than 10% in the current financial market.
P2P financial platform companies act as intermediaries between lenders and investors. It may look similar to a general non-financial company, but it provides lower interest rates and convenience of transactions.
Let's see the advantages of P2P finance.
High interest rates and low volatility are biggest advantages.
P2P investment has higher interest rate and lower volatility than other investment techniques. Therefore, we can expect stable profit. The P2P investment method is simple. In the case of P2P investment, it is a great advantage to invest in computers or smart phones at any time without having to visit a financial institution or create an account.
The range of products ranges from personal credit bonds to real estate, construction funds, and small business owners' business funds. In order to reduce risk, portfolio products that are made up of single bonds are also increasing.
Finally, it is also advantageous that a small investment is possible. The biggest attraction is that you can invest even 10 dollars instead of a lot of money.
Are there any disadvantages?
So far, legal safety net is insufficient. In the case of P2P financing, there is still a limit to laws and institutions, since it has only recently been created. Therefore, there is also the possibility that when a problem arises, it may be difficult to resolve the dispute.
Next, investors have a risk of insolvency. P2P platform vendors are just brokers for lenders reviewing and brokering and managing the execution of repayment, but they do not take final responsibility for insolvency.
P2P financial boom has caused a lot of P2P platform vendors, and bad companies are also emerging. Investors should look closely at the company information, make sure that their operations are transparent and smooth, and make investment decisions. Remember that there is nothing you can do without effort.
Lastly, it takes a lot of time to collect the investment, and it is very difficult to terminate. In other words, it may be difficult to use P2P products according to their investment style. In short, there will be annual products from a month to a year.