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If someone tell you that you have to invest your money and in which you will get 12% interest of returns, then how will your reaction be? Many of you think that it's a sacm and many will try to collect more information about this scheme. Something similar happened with me too, I read somewhere that some applications have come in the market which provide you a fixed return of 12% or more. Initially, I thought that there could be a scam here too, but when I saw that many trustable people have given their reviews about it then I started gathering more information about it.
Image by Niek Verlaan from Pixabay
Introduction of P2P lending Apps
First of all let me give you a small introduction of p2p lending applications. If we understand p2p in easy language then it means person to person lending, general if you want any type of loan then you go to banks for loan and there many formalities are done by bank and lot of investigation is done, After doing all these things when bank finds your all documents ok and when your record is good, the bank gives you the loan. Even after doing all these formalities and documentation, the banks also keep some security with them and also keep the guaranter along with it, so that if in any case you default the loan in the future then the bank can recover the money with the help of these securities and guaranters.
Working of P2P Lending Apps
Many times it happens when the bank rejects our loan application, now in such a situation, if we need money and do not get the loan from the bank then it can be very difficult in emergency situations. In view of this situation, p2p lending applications have been made. General here the application provides you a loan in very few formalities, but the interest rate they have is very high, if we talk wild, it is up to 24% for the loan. Asks interest which is double than the bank.
The working of p2p lending applications is in such a way that these application's first find investor's who can invest money on their applications, for which the greed of high interest rate is kept in front of the people so that people can invest more and more money.
Nowadays if we see, if you go for FD or any other saving scheme in the bank, you will hardly get 6 to 7 percent interest rate and if you invest your money in any government or private scheme, then you can hardly get maximum upto 8 percent interest.Many people fall into this greed that more interest is being received, so we should invest our money here. After getting people to invest money, it distributes that money in the form of loans and charges up to 24% or more interest from the people to whom it gives loans. There is also one thing in p2p lending application that you can invest up to a maximum of 10 lakh Indian rupees.
Risks in P2P Lending Application
The more the profit is expected in anything, the more the risk remains on that thing and this is a rule of investment in market. If someone is giving you more benefits than any conventional thing, then somewhere there is a risk of money in it. The major risk in the application is that the borrower to whom this application provides loan is an unsecured loan because as I told you earlier that this application does not do any strong investigation a d documentation as banks do and they does not even have keep any securities with them, due to which the risk of defaulter users also increases in this application. Now although many famous applications also claim that their recovery rate is very high upto 96% but still some borrower's are still defaulting as it's not 100%.
Benefits of P2P lending Application
The biggest advantage of investing in this application is that you get double intrest returns from the bank and with this you keep getting interest on a daily basis in directly to your bank account.
Another advantage of this application is that it provides more liquidity to your money means you can invest your money whenever you want and you can withdraw your money whenever you want.
The third advantage of this application is that there is no minimum limit to invest money in it. In such a situation, people there can invest a little bit of money in this application for the first time and after that if they find this application trustable, then they can increase their investment amount further.
Image by Сергей Ремизов from Pixabay
If we look at the secure site of these applications, then definitely Bank of India regulates all these applications and for the benefit of the public safety, some terms and conditions have been made for these applications, so if any investor follows these terms and conditions completely then the risk of losing your money becomes very less.
In the end, I would like to give you some tips that you can follow before investing in p2p lending applications.
Whatever application you are using, first of all get more and more information about it and also see what is the recovery rate of that application. Your money will be more safe if you are investing in such application whose recovery rate is high.
In the beginning, do not invest more money on these applications, until you find these applications trustable, then invest only such amount which you can take the risk because many times it happens that the person to whom the app gave our money as loan is declared a defaulter, then it is a bit difficult to recover your money in such situation, but it is not like that you will loose all of your money because these apps distribute the money given by you to many people, whose advantage is that If any one person defaults the money, then the rest of the borrowers will give the money because it is not like that all the borrowers default the money because they also have many options for the recovery of the money.
I hope that whatever I told you about p2p lending applications, you have understood it correctly and you can get some help in investing. In the end, I would just like to say that wherever you invest, invest wisely and invest only after getting complete information.
Thanks for reading till the end
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