P2P Lending Investment in India
An online crowd-funding platform known as Peer to Peer Lending has been created under the regulation of the Reserve Bank of India (RBI), in which the borrower and lenders meet each other for the purpose of borrowing and lending loans. Investors who invest through this platform invest for the medium term, while the interest rate that is offered is higher (15 to 18% per annum) than the normal interest rate.
The idea of P2P lending is to offer the savers higher interest rate on their savings by lending their money to the borrowers who get comparatively lower interest rates.
How does Peer to Peer Lending work in India?
- A potential borrower who may be an individual or small business applies online application for the loan on a P2P platform.
- The P2P platform evaluates the online application and identifies the credit rating and risk of the applicant. Once the application is assessed the applicant is assigned with an appropriate rate of Interest.
- After the approval of the application, the applicant is offered some available options by the investors based on his credit rating and assigned interest rates.
- The potential applicant can assess the proposed options and select any one of them.
- The loan amount is transferred to the applicant’s account and now he or she is responsible for paying periodic monthly interest payments apart from repaying the principal amount at maturity.
What are the benefits of the Peer to Peer Lending?
P2P lending is advantageous to both the lenders and the borrowers.
- Investors earn higher returns as compared to other types of investments.
- P2P Lending is a more accessible source of lending for many borrowers than conventional loans from other financial institutions.
- Due to high competition between the lenders and lower origination fees the borrowers have to pay a lower interest rate.
The Swaraj Finpro Private Limited Advantage!
Swaraj Finpro Private Limited experts will guide through the process and will help you with your online application. We will ensure that you get the best deal!