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Why invest in p2p lending? Top 5 reasons and advices

30 Oct 2020

It is no coincidence that the concept of p2p (peer-to-peer) lending has gained so much popularity worldwide. Online platforms are attracting users who are interested in increasing the amount of their savings. Favorable conditions benefit both borrowers and investors. In the next blog post we will look at the main benefits of investing in p2p lending. Read our blog post on "What is p2p lending?". Is it worth investing in p2p lending? The reasons to invest in p2p lending are related to the conditions that are offered to you. That's why it's important to choose platforms that have clear benefits. A quick comparison of the pros and cons will answer your ”why” questions very quickly.

Benefits of p2p investing

Reason #1: Better interest than banks If you decide to leave your savings in a bank, there is a great chance that you’ll be offered an unattractive interest rate. There’s also a chance that you’ll lose money from fees and other unforeseen institutional costs. These unpleasant consequences are due to the unstable economic situation in which we find ourselves nowadays. With p2p investing, the interest rate is clearly stated and is due on a monthly basis.

Reason #2: You get your money on time P2P investing platforms always determine the investment period and the return that awaits you. That way you can predict the course of your finances in the future.

Reason #3: Controlled risk through buyback guarantee The unique value of p2p lending platforms is the terms that the originator offers for redemption. Also called a "buyback guarantee", this guarantee provides investors with a secure principal. In other words, you’ll always be compensated. Your worst-case scenario is missing an interest.

Reason #4: You invest in many different loans Let's say you want to invest €5,000 of your savings in p2p lending. With this amount, you can support 2, 5, or 10 different loans. Everything is up to you, meaning you can diversify your portfolio without limiting yourself to just one borrower.

Reason #5: You decide how much to invest Many consumers start with a small investment and gradually increase its size. Platforms do not limit and so you have the opportunity to see for yourself the success of different periods of time.

Can you make money with p2p investing? Yes, and there’s a clear reason why. P2P investing follows a simple logic – the longer you invest, the bigger the interest rate you’ll receive. For example, if you decide to invest €8.200 with HelpLending, in a year you’ll have an €8,731.36 return. Easy like that.

Top Reason: Why you should invest in p2p lending platforms Many users believe that p2p lending platforms are complex usury schemes and financial pyramids. Here’s why that’s not true:

With HelpLending, the loans you have as an investor are secured by Help Credit. HelpCredit is a registered non-bank financial institution that has been operating successfully for almost 10 years. This means that investors are in fact persons entitled to receive loan payments - in proportion to the amount they have invested. All this is happening within the framework of the Assignment Agreement and does not contradict the current legislation.

Read more on the topic: Are p2p lending platforms legal?

P2P Investing for beginners: Tips on p2p lending

We advise all novice investors to use p2p lending platforms with proven credibility and clearly defined conditions for loan investing. Start with an amount you feel comfortable with and see the results for yourself. You always have the opportunity to increase the amount, as well as track the status of transactions.

Once you are aware of the benefits of p2p investing, you now have a clear idea of what to look for. With the help of the HelpLending platform you have the opportunity to take advantage of the following conditions:

➔ Full control over investments ➔ Automatic investment according to your criteria ➔ Attractive interest rates ➔ Transparent and favorable conditions ➔ Better returns than banks ➔ Clear distribution of borrowers in categories A, B and C.

We hope that our top reasons list gave you a good answer to the question “Why invest in p2p lending?”. Follow our tips and check out our other blog posts on similar topics regarding legacy and methodology.

Take a look at HelpLending and try it out yourself. We kindly invite you to be part of our referral program. You can always read more of our Case Studies from investors who have tried HelpLending.