Peer-to-peer lending fintech companies are like mushrooms in the rainy season. In addition to providing online loan services for borrowers or borrowers, fintech lending is also a promising investment platform for investors.
P2P Lending has the meaning of direct interaction between two people with the same ability at one time. P2P Lending is a system (platform) that brings together lenders and borrowers online.
In P2P, the borrower will be charged interest every month. In other words, the borrower must pay the loan principal, along with interest according to the tenor.
From there, investors or lenders will get returns or returns every month or every year, depending on the agreement. Now, anyone can become an investor in fintech lending, including millennials and students.
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Are you one of them? Before investing or funding in fintech lending, pay attention to the following:
Profit and Loss Peer to Peer Lending
Give big profit
The advantage of investing in fintech lending, namely high returns. Far above inflation, even deposit rates. So the potential for money to grow is very large.
The returns are given by each fintech lending company vary. But you can pocket a profit of up to 18 percent per year. If you divide by 12, it means 1.5 percent per month. The amount of this yield is still within reasonable limits.
You will receive this income in cash and is usually calculated based on the agreed interest percentage. You can become a leader in fintech lending in the medium and long term so that the results are maximized.
Worth the promised profit, investing in fintech lending is a high risk. Therefore, it is very suitable for those of you who have an aggressive risk profile. The investment risks include:
- Borrowers are late or fail to pay
His name also gives loans, not necessarily the borrower is always smooth in paying or repaying the debt. The potential for late payments or defaults is very possible.
You need to pay attention to this risk if you want to become an investor even though there is compensation that you will get from paying the borrower’s fine. The risk of default will also be borne by investors even though there is a guaranteed refund from the fintech lending company. It’s just that the number is not 100 percent.
- Bankrupt or money is taken away
The risk of investors or other fintech lending lenders is a misuse of funds. If you are not observant in choosing companies with bad credit, they may not be good at paying your money.
Finally, the company’s funds where you invest, sold out because it went bankrupt. Or lost, taken away by the owner of an irresponsible company.
Invest with small capital first
Big risks should make you careful in investing. When you want to start, you don’t need to have big capital right away because you are tempted by the results. After all, investing in fintech lending can be started with low capital.
Once you understand how the investment works, are able to manage the risks, and the profits are as expected, then add capital so that the return you get is also greater.
Pay attention to the bad credit numbers
Another thing that you should pay attention to, is to look at the number of bad loans from p2p lending companies. The lower the number, the better the performance.
From here you can know the credibility of the fintech lending company. Are they strict enough in the process of selecting borrowers or not?
Of course, you want your money to be given to borrowers who are disciplined and committed to returning loan funds. It’s not that it was discovered that it was not feasible, but that the submission was still approved.
You can choose your own borrower
In practice, p2p lending fintech companies will send profiles of potential borrowers who need funds to you. Thus, you are free to choose the borrower that you will fund based on various considerations.
You can also choose more than one borrower. This will make your investment safer. If there is bad credit in one of the borrowers, you can still benefit from other borrowers.
Freedom to determine the tenor
Another advantage of investing in fintech lending is the flexibility to choose a tenor or time period. It could be six months, one year, or two years.
It depends on you, want a faster refund or a bit longer so that you get the maximum profit. With a tenor that you set yourself, it will help you in preparing your next investment plan.
Investment funds cannot be withdrawn at will
You as a lender (lender) cannot take or withdraw funds in the middle of the road. This means that you can only withdraw investment funds after the investment period is over.
P2P Lending companies have their own rules for disbursing funds. Generally, the funding or investment tenors offered are varied, some are three months, six months, one year, and even more.
P2P Lending investments are not guaranteed by the Deposit Insurance Corporation (LPS). However, some companies provide protection funds for investors, although not all of them.
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This fund will be a reserve fund, a substitute for investors if at any time the borrower does not pay on time according to the agreement. This fund can also be used as a replacement for investors’ capital if there is bad credit or the borrower does not return the money.