HelpLending

Are p2p lending platforms safe and should you invest?

30 Oct 2020

Is it worth investing in p2p lending platforms Before you start investing in p2p lending platforms, it is important to check their stability and security. Naturally, the question arises:Are p2p lending platforms safe? Is it legal to invest in a p2p lending platform? To be able to answer your security and legalty concerns, it is important to make a realistic assessment of the p2p lending platform you have chosen. Its stability and potential risks depend on many variables that you need to be informed about. Here's what to look out for:

Origin and brand recognition of the P2P lending platform

Get to know the team behind the p2p lending platform where you’re planning to invest. Do a background check before you register to get an idea of its stability and security. Watch out for companies with a good reputation and a strong market presence. Get to know about their experience and expertise. Then try your best to understand their business model and future development plan.

Controlled investment risk

Read the terms of use carefully to understand how the investment risk is determined. Some p2p lending platforms provide a buyback guarantee where the Investor’s potential loss is in fact, lost interest. This is a safe work model for fund distribution.

Where am I investing? Verification process for borrowers, background check and credit reputation

It is important to build trust with your p2p lending platform of choice. Get to know how the originator determines the "credit reputation score". This way you will know how secure the methodology is. Remember that under EU law you are not allowed to access personal data (under GDPR). This is the reason why the background check verification responsibility falls on the originator.

Example: HelpLending checks the “credit reputation score” by referring to the official institutions responsible for taxes, loans plus all declared information regarding annual income. Then the originator determines the probability of unfulfilled obligations (how safe to invest). After determining the "credit risk", the loans reach the investors in categories A, B, and C. Each investor has the right to decide which of the three categories he is interested in. These categories help investors to determine how safe they want to play, as well as it guarantees them additional security and stability.

Type "A", "B" and "C" loans

Category "A" loans target borrowers, who always pay their debts on time. Investing in this type of loan is most secure due to the excellent credit score of the applicants. If you want to play completely safe, focus your investment strategy there. Of course, if you are looking for a higher return, then category "B" and category "C" will bring you the desired results.

Follow the platform and your payments

You should Log in to the platform often, whether you invest manually or automatically. Always keep a close eye on the work model and changes in the Terms and Conditions. Overdue payments are a bad sign, which you shouldn’t ignore. Stable platforms are secure and safe to use, and they keep up their deadlines.

Security and risk - a game of balance between lenders and borrowers

Many studies on the Performance Analysis of Peer-to-Peer Online Lending Platforms show that stability and safety is determined by the number of lenders and borrowers on board. As in any other financial market, proportional presence is important. In this regard, HelpLending connects investors with borrowers from HelpCredit - an established platform for drawing loans with a 10-year presence on the market. This advantage plays an important role in the stability and security of the financial model.

Secured monthly profit and interest rates with p2p investing

One of the main advantages of p2p lending platforms is that they provide a monthly return to their investors. In addition, in most cases, the percentages are quite attractive. With HelpLending, the interest rate starts at 6.5% and reaches 12.5% - favorable conditions that are not negligible.

Investors in p2p lending platforms are NOT moneylenders

If you are not familiar with p2p investing, you will probably think that it is another financial pyramid. In fact, for platforms such as HelpLending, loans are granted by another financial institution (in this case Help Credit). This means that an established non-banking institution assigns to investors the right to receive loan payments. The payments are proportional to the amounts invested under the assignment agreement.

The owners of HelpLending guarantee that the activity is legal and represents a transfer of rights between individuals.

Stability of p2p lending platforms during a crisis

Even during an economic crisis, most p2p platforms demonstrate good stability, thanks to their relative autonomy. At such moments, they stand out as an alternative financial model where investors themselves dictate the rules and patterns.

History has shown examples where p2p lending platforms continue to maintain impressive rates of return even in times of crisis, while banks experience unparalleled tremors. The growth in the number of p2p lending platforms in China also indicates a massive interest in financial innovations, which in turn is a good sign of the stability (and security) of the sector .More and more government laws around the world are legalizing this activity and encouraging its development.

Stable strategy for automatic and manual investment

Although tech solutions of today tend to do everything for us, it is good to build a stable financial strategy ourselves. We suggest you take a closer look at your automatic investment preferences and make sure your savings go exactly where you want them. Also, always look for platforms with opportunities for portfolio diversification and control over the distribution of amounts in loans. That way you will keep it safe.

Investments with full transparency

Usually, secure p2p lending platforms give full transparency to their users to convince them of the legality of their activities. With HelpLending you have the opportunity to constantly monitor your transactions, where your money is invested, and what happens to the loans. This is another important functionality in secure and legal p2p lending platforms.

Investing in p2p lending is more profitable and safe in contrast to the principle of mutual funds, where all savings are shared and the Board decides the fate of their distribution on loans.

Is it legal to invest in p2p lending platforms?

Check if investing in p2p lending platforms is legal in your country. By no means you want to be involved in illegal activities due to carelessness. Invest your funds only when you are sure of the stability of the platform, as well as its legality and safety.

HelpLending ensures that it gives its investors the opportunity to legally acquire rights from Help Credit. This way you own the right to receive loan payments. This is completely legal under an assignment agreement and does NOT contradict the current legislation in Bulgaria. According to the law, there are no restrictions on the transfer of rights between persons.

Is it worth investing in a p2p lending platform for a long period of time and with increased credit risk?

This is one of the most logical questions you probably ask yourself. The truth is that the highest return comes precisely from investing in loans for a longer period of time and category "C" of borrowers.

After all, the security of the platform always depends on the conditions it offers. Always look for models that offer a Buyback Guarantee. This way you will know that your savings are in a safe place and you won’t withdraw less than you have invested.

Remember to always be critical of every offer, because the responsibility for the money invested is entirely yours. Do not compromise on security and always look for safe, stable financial models. Make sure everything is legal.

However, global trends suggest that society is looking for alternative legal platforms with more flexible conditions for borrowers and investors. This portends a bright future for p2p lending platforms and their development. Follow their progress and don’t kill the potential of your savings under the pressure of unpredictable economic processes.

Keep it safe, legal and stable.