Would your Savings Account and FD interest cover the time value of money? With inflation at 5-6%, P2P investments can yield handsome returns. P2P lending sites let you directly borrow and lend money, so they have attractive investment potential without exposing you to market risks.
P2P lending in India is relatively new, but it is growing in popularity quickly. According to the forecast published by IndustryARC in “India P2P Lending Industry Outlook 2021-2026,” the P2P loan market in India is expected to increase to US$10.5 billion by 2021 and 2024, according to industryARC. Here are all the details about P2P lending sites and which ones are the best.
What is Peer to Peer Lending?
P2P lending sites allow individuals, who want to invest money, and individuals, who want to borrow money, to directly register and deal with each other through peer-to-peer lending. In other words, peer-to-peer lending is direct lending between two parties where one party invests money and the other party borrows it. Crowdlending, as a result of this reduced role of banks, has become simpler and more accessible for the public.
To mitigate risk, P2P platforms diversify investments into multiple borrowers. You can use LenDenClub to set up auto-investment facilities. Instead of investing manually in each borrower, you can choose filters that automatically invest your money based on your preferences, optimising and automating it at the same time.
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Understanding Peer-to-Peer Lending
P2P lending platforms connect borrowers and investors. However, the interest rates and terms of each P2P lending platform are different. The applicant’s creditworthiness determines the interest rate.
Investors open a P2P lending account to deposit money to be lent and then choose one or more loans when an applicant applies for a loan. The interest rate on an individual’s financial profile will determine the platform’s interest rate. When an applicant applies for a loan through the platform, they can look at a number of offers and choose one or more.
The lenders and borrowers can use the platform to process money transfers and monthly payments. Some platforms, on the other hand, require the borrowers and lenders to negotiate for the best deal.
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How do P2P lending platforms provide loans?
- Look at the reliable P2P Lending websites and then register to become a member.
- All the paperwork associated with setting up a bank account will be handled by the website. On your behalf, it will contact a potential lender who is prepared to lend you the required amount.
- Before loan amount is transferred to your bank account, there are various checks on your background, personal data, employment status and credit history. To avoid financial difficulties, loans are provided only to reliable borrowers, so the quality check is very strict.
- You will be offered several loan options to choose from based on your credit rating and interest rate assignment, in addition to choosing the loan amount and terms.
- You can choose one of the offered alternatives.
Top Best P2P Lending Platforms in India
It’s crucial to recognise the distinct attributes of each P2P lending platform before investing or borrowing from one. That’s why we’ve identified the best peer-to-peer lending platforms in India.
#1. The Money Club was created by alums of INSEAD, INSEAD, and UCLA to let one million people join money clubs with other like-minded individuals. With the help of advanced technology, this AI-driven chit fund platform has changed the way chit funds are conducted in India. Through technology, the Money Club has enabled people to save more, borrow at low rates, and invest for the greatest returns. With an average return of 25% per annum, Money Club is a smart investment tool that multiplies your savings. More than 13,000 groups and clubs have been created since its inception, and more than 32,000 individuals have signed up for it.
#2. Lendbox is one of the most popular P2P lending platforms in India. This RBI-approved NBFC-P2P firm has around 2 million registered borrowers and 20,000 registered investors. You can save more and build a secure passive income by using this platform. On average, your ROI will be 24%.
#3. Faircent, launched in Gurugram in 2013 by Rajat Gandhi, Nitin Gupta, and Vinay Mathews, is a P2P lending platform. To provide better interest rates for both borrowers and lenders, this platform connects lenders and borrowers directly, cutting out the financial institution (middleman) to save money.
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#4. Finzy – Abhinandan Sangam, Amit More, Vishwas Dixit and Apoorv Gowde founded Finzy in 2016 to provide personalised lending at competitive rates. This Bengaluru-based P2P lending firm helps secure fast and simple loans at unique prices based on borrowers’ creditworthiness.
#5. i-Lend – In 2012, Mukesh Kothari, Shankar VVSSB, and Niti Gupta founded i-Lend, an online marketplace that connects borrowers to lenders. They created this Hyderabad-based P2P-NBFC to provide high returns on loan investments and to offer attractive interest rates.
#6. i2iFunding – In 2015, Abhinav Johary, Neha Aggarwal, Manisha Bansal, Vaibhav Pandey, and Raghavendra Pratap Singh founded i2iFunding, a Noida fintech company. This platform offers attractive loans to borrowers at low rates and high profits for investors.
#7. PaisaDukan – In 2018, Rajiv Ranjan established PaisaDukan, a technology-dependent platform for borrowers and lenders to conduct transactions seamlessly. This P2P lending firm is based in Mumbai and run by BigWin Infotech.
#8. LenDenClub – Bhavin Patel and Dipesh Karki founded LenDenClub in 2015. This P2P lending business provides a platform for borrowers and lenders to connect directly. There are more than 7,000 lenders on the platform and more than 25,000 borrowers.
#9. RupeeCircle – Mumbai-based fintech startup RupeeCircle, headed by Ajit Kumar, Ashish Mehta, Piyush Saurabh, and Abhishek Gandhi, offers lower interest rates on loans and higher returns for lenders without intermediaries. Using technology, it provides cheaper interest rates on loans.
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Why P2P Lending is Better than Banks?
In peer-to-peer lending networks, traditional financial institutions and banks do not approve loans to individuals with a poor CIBIL score and low monthly income. To make a loan, the lender in a peer-to-peer lending network has the discretion to choose who he wants to lend to and who he does not.
Individuals with a low CIBIL score and low income can obtain personal loans on these platforms from multiple lenders at low interest rates and flexible terms. Because the borrowers can directly bargain with the lenders, they sometimes obtain loans at a lower rate than the banks.
Users on P2P lending platforms do not have to go through a hard-core documentation process in order to borrow money. With minimal paperwork, borrowers can get loans from the lenders available on the website. The lending and borrowing process is based on the mutual understanding between the borrowers and lenders.
P2P lending platforms are faster and simpler than traditional banks in terms of process. The time it takes to process loans on these platforms is significantly shorter compared to banks, and borrowers do not have to wait for a long time for their loans to be approved and disbursed.
