The peer-to-peer lending platforms connect the investors with the borrowers a lot faster and way cheaper than any bank in the world. Peer-to-peer lending represents a new type of debt financing that allows people to lend and borrow money without involving a financial institution. Therefore, P2P lending platforms harness big data and technology to make things work.
OnlineLoginGuides.com offers information about how to login to different websites or platforms. There you can find specific step-by-step guides, that will help you get through any login process, no matter how hard it seems at the beginning. In recent years, peer-to-peer lending has rapidly developed, becoming a new source of income for new investors.
P2P investments are known to be less volatile when compared to stock markets. Furthermore, this type of investments also offers higher returns than other conventional sources of yield. In what follows, we will make up a list of lending platforms for investors to help them make profit.
1- Funding Circle
This lending platform appeared in the US in 2013. The U.S. Managing Director and co-founder is Sam Hodges. The Funding Circle operates only in the US, the Netherlands, Germany, and the UK. This firm managed to offer more than $3 billion in loans while the loans varied between $25,000 and $500,000. Depending on the grade, the rates vary from 5.5% to 27.8%.
This lending platform charges every investor with a 1% monthly service fee on all the payments received within a month. Investors should know that the minimum investment is $50,000. The lending platform has helped over 8,000 businesses around the world, offering them loans. Nowadays, the platform’s investor’s base includes over 40,000 banks, financial institutions, retail investors and the UK government.
Upstart was launched in 2014 and it has offered more than $300 million worth of loans. This lending platform uses different grading criteria. Hence, it analyzes the FICO scores and educational background. The company has the lowest default rates in the whole industry so far. More than 94% of loans are ready to be repaid in full.
The target niche of Upstart consists of young professionals and small-business start-ups. More than 90% of the borrowers are college graduates. This lending platform offers loans starting from $3,000 to $35,000 for fixed periods. The interest rates vary from 4% to 26%. Upstart uses an accurate modeling system when it comes to predicting future returns and defaults.
This lending platform was launched in 2006, being the first peer-to-peer lending platform in the US. Since then, Prosper has funded more than $6 billion in loans. Furthermore, it has serviced more than 2 million customers. This peer-to-peer lending platform provides only unsecured loans, without SME loans. Just like Lending Club does, Prosper also offers 36- and 60-month loans. The loans vary from $2,000 to $35,000.
Prosper also operates under the notary business model. Every borrower who uses this lending platform is charged a “closing fee” that varies between 0.5% to 5%, depending on the grade. Prosper charges investors with an annual fee of 1%, relying on current outstanding loan principal. The minimum investment one can make is $25. Using its Prosper Score, the lending platform can grade borrowers. The proprietary system relies on criteria like debt-to-income ratio and soft checks handled by credit bureaus.
4- Lending Club
This is a famous P2P lending platform which was founded back in 2007. Specialists indicate that this is the largest one, with more than $20 billion in loan issuance. This platform provides both small- and medium-sized enterprise (SME) and also consumer loans. The loan periods are fixed, choosing between 36 or 60 months. Currently, Lending Club has a 45% market share since it has grown exponentially. Furthermore, this lending platform uses a model rank system that helps it grade borrowers. The system makes use of a combination of FICO score, proprietary scoring model and several other credit features of the borrower.
Lending Club relies on a notary business model. Therefore, it behaves like an intermediary between investors and borrowers. When they fund a loan, a partner bank releases the money to the borrower. Then, Lending Club issues a note for the investor which stands as a security for this process. This peer-to-peer lending platform provides loans starting from $15,000 to $30,000 for businesses and from $1,000 to $35,000 for individuals.
The Bottom Line:
As an investor, finding the right lending platform which can bring you a lot of profit can be difficult. However, the list of lending platforms above offers you more details on the charges for every investor, the number of borrowers and loans offered. In this way, you are able to decide which one is suitable for your needs. These peer-to-peer lending platforms are bound to help investors figure out how to find trustworthy borrowers.